Pitfalls of unlimited magic item creation:
Well, under a system like Pathfinder that doesn't charge XP for magic item creation, unlimited creation coupled with a free magic item market where things can be sold for market value provides a very easy way to generate lots of cash. At the very least, it lets you increase party wealth massively over standard wealth by level. We tried removing XP costs from crafting in 3.5 once, and by about 9th level we had twice as much magic gear as we should've.
Then there's the verisimilitude issue. Who makes all this crap? Why did some wizard spend 200 days out of his life making just this perfect +4 keen vorpal kama, investing 100000 gp worth of materials into a product for which there is a terribly limited demand? Why didn't he hire a company of pikemen and set himself up as a wizard king of some significant region of countryside with that money instead? Effectively, as a player and a GM, unlimited magic item purchasing freedom breaks my suspension of disbelief unless some very fast talking is done on a very regular basis. Eberron is one place where I might buy it because of the volume of artificers and magewrights and whatnot; not familiar enough with the Realms or Golarion to pass judgment there.
Consequences of restriction
Really where restrictions hit hardest is saving throws. There are lots of buffs that boost to-hit and let you punch through DR as though your weapon were magical; the options for general saves are rather more limited. Coming out of a 13th-level campaign where there were no Cloaks of Resistance to be had, I can tell you that it's a sad day when the pitiful 0th-level Resistance is a staple buff of 13th level characters (that and Protection from Evil, if we knew what we were going up against). But it was absolutely clutch to have; we went up against a bodak around 9th level, and I was the only one who bothered putting up Resistance and drinking a potion of Bear's Endurance. I was also the only survivor. Bad saves scale much more slowly than monster save DCs, and Cloaks of Resistance save lives. So, by opting for non-purchasable magic items, you can increase campaign lethality significantly. This may be desirable.
Additionally, if you keep handing out gold, players will be at a loss for what to do with it all. Then they'll start bribing magistrates and hiring mercenaries and buying ships and building castles and otherwise using money to interact with the world in a manner other than "buy these things that make my numbers better". If these are behaviors you wish to encourage, then restricting magic item purchases will help you achieve this end.
Kinds of games which benefit from unlimited magic item availability
Arguably, adventure-path type games and similar plot-heavy railroads benefit from it. Games where you don't want PCs dying left and right, and where you don't really want PCs to go out of their way to interact with the world (because that would damage plot), and where you likewise don't particularly care about the economic ramifications of allowing infinite availability. Combat As Sport games, where you want their numbers to be juuust right for them to fight your lovingly crafted encounters and not die. If that's the type of game you play, then unlimited availability is a great idea. It keeps everybody happy, and you don't end up with that one guy with the +4 sword that you rolled on the treasure tables while everybody else has +1.
Despite this, I still prefer to play and run games with limited magic item availability. If someone wants a Holy Avenger, they better go find a library and figure out what dungeon they can find one in, because they don't just have a rack of 'em at the general store. This generates player-driven quests, which I find to be generally more fun than DM-driven quests (be it via NPCs or circumstances). Likewise, I like my games reasonably-lethal, sans fixed plot and with as much player involvement with the setting as I can muster. Making magic items freely available for purchase at market price stifles all of these things.