ME1 wasn't an RPG, it was an inventory management simulation. You spent 50% of your gameplay time frakking with your inventory, deleting stuff, selling stuff, all to deal with the item glut that the game threw at you without end. 2 and 3 vastly improved that situation.
I think the ME2 system with the "variety" of items of ME1 (more than 2-3 pistols) AND having the same for armor (instead of just Shepard getting armor prototypes) would have been nice. If anything, I liked how you customized the looks of all your squaddies.
Get rid of all the inferior weapons/armor (the ones that don't have ANY upsides). Keep the "you only need to find it once and you can equip everyone for free" system from ME2.
In the end, in ME1 I discovered the way to play was
1) Know beforehand which brands are good at each rank. Saves a LOT of time when deciding what to keep.
2) Turn EVERYTHING that you won't use into omnigel until... rank III or so? Even selling those was a waste.
3) Once stuff starts getting expensive, keep some of it to sell (you'll probably fill either your omnigel or your bank account to maximum very soon, so that choice will make itself)
4) Use OMNIGEL for Everything. Like, even the easy puzzles. You can't ever run out of omnigel, apparently.
...
5) Say "fuck it all" and get a mod/edit the ini to allow for a ridiculous amount of inventory space, never bother selling or gel'ing anything again
EDIT: Oh yeah, and adding ammo was stupid (not plotwise, just... stupid mechanics-wise. not broken / don't fix it!)