Unlimited. I have yet to see a realistic rpg inventory
I´d say The Witcher, for example, sports pretty realistic inventory.
And in that game it goes conceptually well with the other game´s
aspects - the gameplay is not designed around upgrading gear every 10 minutes or changing it substantially per encounter and, perhaps even more importantly, it goes well with the main character, it´s sorta an characterization aspect. The abstraction of being able to carry 10 swords and 5 armors would diminish the feel/believabililty of playing that particular guy. The limited inventory is one of the ways how to put players in the main protagonist´s shoes and the good thing is loot implementation more-or-less respects that (doesn´t "tease" players with +2 swords at every step and so on).
Not-yet-enhanced edition probably went too far since it unnecessarily limited alchemy, but the addition of alchemy sack in the enhanced edition leveled it up to quite optimal level, in my opinion.
Anyway, the point is inventory systems don´t exist in vacuum. (duh
)
Generally speaking, I don´t mind any kind of inventory system if it doesn´t clash
with other game systems.
What usually irks me the most is rigidly limited stacking of projectiles - it tends to make certain class archetypes more hassle-y than the rest. Maybe it was an balancing act, but I really dislike how arrows were treated in Baldur´s Gate 1 inventory-wise. I think that 90% of inventory shifts I´ve made were due to having two bow-chars in the party. Thankfully - mods (BG Tweaks ftw).
Resource management with a point usually means limited inventory space.
When it´s unlimited it should be at least balanced via other means, like drinking animations in Gothics, for example.
I usually like resource management with a point, resulting in my general preference being somewhere between realism and balanced.
Voted "realism", since I expect it to have statistically no chance against "balanced". Everyone loves balanced
.