I have/had mixed feeling regarding this as well. It seemed odd that a chest I pick up as a quest reward at level 15/16 would still be my chest armor at level 50 - so long as I updated the mods regularly.
Then I thought about it further.
Instead of an incessant quest for new gear...it's an incessant quest for mods. No different.
The difference is now there is a greater chance that we are not all going to look the same. I agree that is a minor thing but I like this system for that alone.
You should have seen the closed beta mod system. It had it's issues but it felt Star Warsey (yes that is a word)