When playing Smash purely for fun, items of course are either used or not used depending on personal preference, and stages are similarly banned or not banned based on personal preference.

However, it becomes troublesome for tournament play:

The items-off method, as you pointed out, does have the equilibrium problem on some stages, which unfortunately means that those stages must be banned. However, the items-on method has its own issues:

1. Items, when available, are typically much more powerful than the characters’ built-in attacks, which means that they dominate the built-in attacks. Furthermore, the number of ways to use an item are typically much fewer than the number of ways to use built-in attacks, which means that the items actually dominate more options than they add, reducing the depth of the game. Of course, items are only available part of the time during the match, but during those times the depth is reduced, which is generally frowned upon. (I suppose the overall complexity with items is higher, however.)

2. Items spawn at random times, at random locations, and have random effects. This means that the outcomes of matches between players of similar ability will frequently be determined by randomness from the item spawns. In tournaments, randomized outcomes are of course frowned upon heavily.

So really, what this means is that, for tournaments, both the items-off approach and the items-on approach have significant flaws, but generally players consider the items-off approach to be better overall.