I'm not a huge fan of the level of itemization in 4e. The process of filling in "slots" it both a bit too mechanical and a bit too bookkeeping-heavy for me. Thematically, I'm a much bigger fan of fewer items, but with more punch and more story.
Curiously, this is harder than it seems. You can handle the gross balance easily enough by just removing magic item bonuses entirely in favor of an automatic bonus to, well, everything (attack, damage, defenses) of +1 at 1st level and increase it by +1 at levels 6, 11, 16, 21 and 26. Call it a "Heroic" bonus, the benefit of being named characters. This pretty much guarantees the characters stay balanced in terms of numbers, but it doesn't solve the entire problem.
See, it also strips the character of a wide range of extra abilities, as many as 15 or so. Some may be minor or passive, and there are limits on how many can be used in a given scene, but that's a LOT of options (for better or for worse).
The easiest way to address it mechanically is to give more feats - if you give the character a feat at every level, that's about as many extra feats over the course of their career as they have magic item slots. This is a little out of whack since the distribution is over time, but since you can synergize with your existing feats, I feel like that comes out in the wash.
There are two downsides to that approach: First, it wreaks havoc with the character builder software, and second, it overlooks the simple fact that magic items are really cool. We WANT to have a sword whose blade flickers with flame - it's just that we don't want it to be lame.
The simplest solution is to use the cool magic item rules, and only hand out artifacts. Yes, artifacts used to mean items of earth-shaking, game changing power, but in 4e they really mean "Magic items that aren't boring". They're potent, sure, but nowhere near as much so as previous editions, and they have numerous interesting (and play-driving) checks in place to make them a practical inclusion in your game.
Now, I can sense the hesitation. Making heavy use of artifacts has historically been a shorthand for monty haul style play, and in the classic usage, a single artifact can really dominate a game. Plus, can you really *trust* players with that kind of power?
To that I can only say: embrace the ways that 4e has changed the game. More than any edition of D&D, this is the story of YOUR GROUP - not Elminster or Bigby or Raistlin or Drizzt - YOU. Own it. If something looks like it's cool or interesting, then it should end up in your player's hands, not someplace where they can watch it from a distance (or worse, just hear about it). Previous versions of the game have (sometimes unintentionally) told you that you weren't cool enough for the things that regularly happened in novels. 4E makes it clear that opinion should be stuck where the sun don't shine.
So just think about it for a minute - a game where every magic item is an artifact. Think what that says and does for the world, how rich it demands that things be. Power comes intertwined with stories and people, and that's as it should be.
Anyway, I personally favor using all 3 (inherent bonuses, extra feats and artifacts-only) if I'm stickng to the core rules. A more complicated (but maybe more rewarding) approach is to construct item to grow with the player (and use more than one slot) but that's a while other post in its own right.
Happy new year, folks.
1 - This wasn't really an option when the game started, but now that it's mature enough (and DDI makes it easy to track) there are now enough feats that this sort of option is actually useful rather than just useful on paper.
2 - This includes minor items. One nice upshot of this is that you can get a little bit old school and encourage clever use of items in strange places. A bottle that's always full of water is a trivial item in terms of power level, but absolutely drips with story potential that is best realized when it's a one-of-a-kind (or one of a set - sets work too) item.
3 - If you take this route, there's no reason you can't use regular magic items, at least as a starting point. The trick is to remember that when you want to use an item, you need to think about what it means if this it "THE flaming sword" not "A flaming sword". Look at the Adventurer's Vault products for inspiration - they're full of neat stories about how an item came to be, but they tend to end with "and now people make copies of that" which kind of saps the juice from it. Take those backstories and bring them to life, and suddenly they're a resource for your game, not just clever color.