Eh, I'm not going to say to balance the game, per se, but it definitely helps to give the game flavor. You're going to be carrying your armor on you no matter what...it's pretty unlikely that you'll have multiple sets of armor to swap out; unless you've got really high-level enchanting, you're probably just going to be wearing the best of whatever kind of armor you've decided to level up. So there's not much of a reason to incentivize not carrying armor, because you're pretty well stuck with it. On the other hand, it's pretty easy to see why a character would stockpile weapons: enchanted weapons are all over the place, even at early levels, a character might want separate weapons for two-handed/one-handed/archery, and you might want to carry around weapons you only use in specific scenarios (e.g., silver swords for undead or soul-capture enchantments for soul-farming). So, there's a lot more reason to make the player choose swords than to choose armor.
Also, this is a game where "ebony" is a type of metal and quicksilver comes in ingots...who knows if mammoth leather, e.g., might not weigh far more than what we're used to?
