I have found that, when I play World of Xeen, I find the game to be a lot more fun when I don't bother with armor. Does anyone else?

The problems with armor are as follows:
1. Armor breaks as soon as your HP reaches -10. That happens a lot later on and it is incredibly annoying to keep going back to town to repair it.
2. Inventory management is a nightmare when it comes to armor. Inventory management is probably my least favorite aspect of the game, so simply selling armor makes it much less annoying. (Keeping Obsidian Armor for my Cleric might make sense, but only for the Southern Sphinx, and I believe it's not necessary to do that with all the level boosts, the AC fountain, and Day of Protection.)
3. Armor isn't even useful all the time. It only helps against enemy attacks that do physical damage, and only if the enemy's Accuracy is at least close to your AC. In particular, armor is useless in Vertigo, Castle Xeen, Castle Alamar, most of the Dungeon of Death, and in the Mega Dragon fight.

My conclusion is that armor is more trouble than it is worth. (I consider this to either be a design flaw or a symptom of one.) Therefore, I just ignore that aspect of the game and sell the armor I find.

Personally, I play RPGs with mini self-imposed challenge - no deaths. Unless it is really-really required. Playing carefully in World of Xeen won't lead into much deaths. I enjoy aspect of managing inventory (but hey, I am accountant, so...). I like to make wish lists and decides which gear will be needed by which char. Not really so. You can get armor with various affixes, including resistances. I didn't bother with gear in Adventurer mode in World of Xeen. Warrior Mode was different story. Monsters apply debuffs only when they manage to hit you, if they miss due to high AC - no debuff. Equipment saves a lot of money and time in the long run.

1. I consider such a "challenge" to be against the spirit of the game in a sense. Death has been implemented as a game mechanic, and by reloading every time it happens, you are subverting it.

Also, -10 HP isn't death (unless the character's max HP is less than 10); it is only unconsciousness (a condition that can also be inflicted by certain enemies, such as Liches). Unconsciousness can be cured easily by any healing effect, provided the character has positive HP afterwords. (This includes spells like Cure Poison, incidentally.)

2. I just find that inventory management gets into the way of the fun parts of the game.

3. Armor with worthwhile affixes isn't that common. Is 3 points of Cold Resistance really that useful?

Also, with respect to avoiding status ailments (I dislike the term "debuff") with AC, there are a few things to consider here:

If an enemy's attack is *anything* other than physical, AC is useless; enemy attacks will always hit. (You can sometimes avoid status ailments by reducing the damage to 0, however; especially useful against enemies like Sprites.)

If an enemy has a weak physical attack (for example, Medusa Sprites), Power Shield can negate the damage without the need for armor.

If an enemy actually has a physical attack that you need to avoid, armor isn't as important as you might think. There is the +50 AC fountain on Darkside, and casting Bless raises your AC by the caster's level.

In terms of enemies with dangerous physical attacks:
Minotaur: 292 average damage with no status ailment chance isn't a problem at that point in the game. Also, you should have access to the fountain of youth, and ageing isn't a problem in small amounts.
Gorgon: You can do the Dragon Tower before this dungeon (note that AC is useless there) and hence get access to the 50 level fountain. You could then go in at level 100, giving you 100 AC from Bless and 50 more from the AC fountain. You now have 150+ AC without armor, which is far more than the Gorgon's 100 accuracy.
Dragon Mummy: At this point, if you can get a character's natural level noticeably over 100, you can use the level and AC fountains, then have your highest level character use Bless/Day of Protection (from an item if necessary) to get well over 200 AC. Dragon Mummies "only" have 200 accuracy. (Incidentally, if this isn't enough and you have a cleric, your cleric is the *only* one who actually needs armor.)
Vampire King: Only 150 accuracy, plus they are completely optional.
Whirlwind: 257.5 average damage to your whole party. Manageable at this point in the game, especially if you use the 2500 HP fountain, plus there is Divine Intervention for healing. This enemy can reliably (50/51 chance, I believe, which is more than 98%) be killed with Implosion before you even get into combat, and its attack isn't ranged.
Armadillo: Can easily be affected by Beast Master, or you could go around the area to reach the 50 AC fight (they only have 60 accuracy).

Pretty much any dangerous enemy not listed here doesn't do physical damage, making AC completely useless against them. Hence, the best strategy is to unequip your armor so it doesn't risk getting broken.

I treat unconsciousness as death too. Everything that is <=0 HP means "dead" to me. Minimum Resist bonus is +5 and it is lowest possible tier. They go up as high as +40 (for Poison) per piece of equipment.
I don't know exact calculations of Resistance in MM 4-5 (but I suspect MM 6 duplicates them), but it is clear that higher Resistance -> higher chance to receive 50% less damage (and 75%, 87.5%, 93.75% with higher Resists). Power Shield is calculated AFTER that. With high enough resists and power Shield you can reliably get 0 damage from high end dragons. And then take what I wrote on resists in consideration. AC + Resists simply cover you on both fronts - physical and magical. Every bit of armor helps. Darkside is of no question on start of the game (otherwise it equals exploit), and later on you get significant AC from armor, which competes with 50 AC boost. It also means wasting Lloyd's Beacon slot to keep returning to that fountain and back as buffs don't last forever. Against some enemies it is useless but not against all enemies. Especially at the start of the game, when you get things like 3 tiger moles from the box, jousters, barbarians, stingers. Especially crucial when enemies have class-hate (e.g., most of undead keep focusing on cleric). It might be of little importance on "Adventurer" mode, as it has hidden modifiers for character damage and hit chance. On "Warrior" mode you need AC. Or you will spend ages healing up unconscious mage back to 100% (otherwise class-hating monsters will turn his portrait into grave).

At late Darkside levels characters become so powerful that they outlevel most things easily. +- fountain doesn't matter. I truly wish Darkside had more [powerful storyline] bosses. Fighting Alamar would be interesting.

A few things:

Do you treat unconsciousness as death when the character's HP is still positive? If so, what do you do if you save and then discover that someone is unconscious?
(Also, reloading when characters die is not how the game is really meant to be played IMO.)

Resistance can be better obtained through fountains. Note that you can get significant permanent bonuses for Fire, Cold, Electricity, and Poison from the Temple of Bark, which is actually easy to clear (except for the boss) at relatively low levels. Hence, you only need to worry about Energy and Magic resistance.

In Clouds of Xeen, casting Protection from Elements will typically reduce the damage of non-dragon magic attacks to the point of being relatively harmless, and for dragons, you can use a resistance fountain. (Remember, cast Protection from Elements *after* Day of Protection, as the former provides a bigger bonus (assuming your level is less than 200).)

AC and resists can be raised high enough from other sources, and small amounts of AC do you no good. AC is useless unless it reaches the point where it can make enemy attacks miss.

Lloyd's Beacon isn't really that important. You can get to the AC fountain with a beacon set at the fountain of youth and a few teleport spells.

By the way, here's an interesting trick: In Darkside, Teleport into area A1, face north, and cast Time Distortion. Notice that fountain in front of you? Try drinking from it.

If you want to see how much difference AC can make visit the well which grants +20 AC early in MM3.

Or the +50 AC well in Darkside F4.

As I've mentioned, AC is only useful sometimes, and when you actually need it, you can get it without armor, or with armor only on one character.

Also, in MM3, armor breaking is less annoying, as when you reach -10 AC, only the armor in the body slot breaks; your shield, helmet, boots etc. are unaffected.

(There's still the issue of eradication, but that's rare.)

Even more so, I tend to use Reload skill when characters get Poisoned, Aged and what not (unless it is the game, where such status effects disappear after fight on their own)....

Also, you will laugh, but after each fight with Tomb Terror and similar enemies, I check my characters to see if they were magically aged. If yes - I reload... It is easier to do so in MM VI+, where characters weep and get lightning all over their portrait when they get Aging attack.

However I balance it out by not using even a single consumable, unless it is required by story (use such-and-such item to remove invincibility mode of boss) or unless there is just absolutely no other way to win. Also, gems partly fit my definition of consumables. But consumables, which permanently increase some stat, are exception.

I found the breakage mechanic to be bothering.

I like fiddling with the armor invetory part but the breaking of armor way too often is just annoying.

Except that:
* The well doesn't have the same issue with armor breakage; you can get the AC bonus without having to worry about a piece of armor that can break.
* In MM3, only your chest armor breaks easily; other gear, like shields and helmets, will survive the character being reduced to -10 AC. This makes the mechanic far less bothersome than in the Xeen games. (Being eradicated will still break everything, and unlike in Clouds of Xeen, there's no special unbreakable weapon that ignores resistances.)
* Furthermore, there's a lot more money toi find in MM3 than in Xeen, so you don't have money issues late game, at least not to the extent you do in World of Xeen.