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And, considering that items are leveled, there's really no reason to keep older items, even if unique (besides looking cool while equipping them).
So, I guess keep reagents/crystals/whatever that you 'll think you'll want to craft equipment later on. That's about it, really.
http://images.akamai.steamusercontent.com/ugc/262710971038535810/3B2DC374F414D703D0437FA10CB80B0EE31E414C/
There are backpacks you can buy to increase the inventory space.
As far as I can tell the reagents and crafting materials don't count towards the inventory limit, but books do.
Rikka Egest in Gorhart
Riona Helt in the Asker's Alley tavern in Ysa
Wil Donall in the main Scholia Arcana hall in the upper part of Rathir
Senecer Macit in the Domus Politica in Adessa
Illyn Doldran in Mel Senshir
If you have the Teeth of Naros DLC
Ampelio in Idylla Market
If I remember correctly, a merchant will always keep the 50 most recent items you sold to him, even after a stock renewal. Merchants can therefore be used as mules.
Use your cheapest items to avoid losing too much gold when buying back the items later on.
1; Save Game, quicksave, whatever.
2; Buy a backpack from Illyn Doldran in Mel Senshir
3; Exit conversation, go Agressive, kill him
4; Teleport out immediately. go to any rest area or house and sleep 4 days.
4.5; (optional) don't teleport out, let them arrest you and spend four days in jail for free, losing a bit of Experience [but never deleveling]
5; return to Mel Senshir and buy another backpack from Illyn Doldran
6; (optional) back out before buying the new backpack and quicksve again.
7; (optional) repeat as much as you like. I like to have 200 inventory slots, myself.