And why not both? Powerful U/U items should exists along with craftable gear with materia on it.

To make U/U more interesting, add special bonuses/effects that cannot be obtained through materia. Add also active abilities with cooldown that can only be used if you are wearing a specific U/U piece of gear. Then balance stats cap of all classes so players are forced to equip a mix of U/U items and crafted gear with materia in order to be able to cap everything.

That's how gear & itemization worked on DAoC, players had to own powerful U/U items AND, in order to cap all their major stats, were forced to have couple of crafted armor piece, enchanted with gems they wanted (basically the same system as the materia system we have).

Equipping only U/U items wouldn't work because you would overcap some stats, while some would remain uncapped. Equipping only crafted items with gems wouldn't work because bonus provided weren't high enough + no special abilities.

The key? The perfect mix between U/U and crafted items. Everyone was happy.