I prefer the "balanced" approach, mainly to protect me from myself
. Without
any carry limits, I end up carrying just about everything I can find, to the point that my inventory regularly becomes an ungodly mess. Even with a good auto-sort mechanic, it still becomes a major headache after many hours of looting.
I love "realism" in games, but I also like to have fun while playing a game. This is why "balanced" appeals to me; there is enough of a limit in place to ensure
some form of believability and it helps players manage their inventories (and also helps balance the in-game economy) without feeling so heavy-handed that looting is no longer enjoyable. The Elder Scrolls series is a great example of a loot/carry limit approach that balances some form of believability with "fun."
The only exception where I could see a hardcore/realism loot approach working would be in a game that is designed around survival. In a setting like Fallout, for example, I can definitely see a more "hardcore" or realistic approach being a logical design choice. There would have to be consistency to make this work though; just about
everything in a hardcore survival-type game would need to be designed around this type of approach in order for a realistic loot system to make sense.