Player1 - Simple, because you can't carry the loot and you can't sell a lot of it. The incentive to explore and do sidequests is exactly to get said loot!
Elias - Apparently I need to explain myself better. Just giving more option for the sake of it is not going to improve the game, it has to be things that bring something new and positive to the game, that said, more option is always good. Limiting a player in what he can do is not always a good thing. Obviously there are always going to be limitations but even so you should always seek to give players as many options as possible.
You say it encourages me. This is wrong, the whole game and the way Al Fabet was made pretty much throws this at your face. Ignore loot! You don't need all that loot, you can do with just taking the most valuable items and be done with it. This is not theory, this is what the game encourages you to do and what the developer wants you to do. The moment you are throwing away the majority of loot you are losing the rewards of exploring and sidequests (to some the degree the ones from the main quest as well but the less you do the less you lose). Doing side quests and exploring is for the rewards. You may do it once for the fun but the majority of people are not going to do all the side quests and exploring the entirety of the map in every single playthrough. They've done it in the pastm, they know the outcome, they know there is no reward waiting for them, might as well just skip it! That is what the game encourages the player to do... Yes, I do have a problem with the system, but that is because the system is bad. I'm not saying the old system was perfect, but it was a lot better than the current system. Why do you think that there are no other games with systems so agressive towards player loot? Because they know it's a bad system, because they know most players will dislike it. In fact one of the most common cmplaints about RPGs is their limited invetory size being too small.
I'll tell you even more, if you create a pool and manage to get it spread to most gamers with the 2 following options. Do you prefer your RPG to have a system that has no limit of inventory space and merchants buy everything or a system that highly limits your inventory space and merchants only buy a small percentage of what you can carry. What do you think will have most votes?
Above all this question must be disassociated with a game. So there is no fanboys nor haters voting specificly in one or another. What matters is simply to evaluate what system is perceived as being better by gamers.
And lastly, yes it is as simple as putting it back. Unbalanced system? The only problem the old system had was one and just one. There was too much money floating around. Guess what, the current system does exactly the same, only worse and yes, it is worse because while not having much recent playing experience, I remember how much money I got after doing the first quest and right now, even selling less I still end up with more money than before. So what could the old system do to unbalance things? You'll have more money? It's not like it is a problem to beggin with! Other than that nothing changes. The loot you get is the same after all. You only leave the things that are not valuable and you'll never use behind after all. There would be no balance issues that don't currently exist and more to the point, were not as bad before!