For the later half of the game your inventory will typically be full. The interface gets a bit clunky when your inventory is full. Sometimes you need to temporarily drop items in order to pick new ones up and equip them. This is something that quickly gets annoying so I have changed this functionality.
When you have full inventory and pick up an item you will instead be taken to the inventory screen where you have to get rid of an item instead of not being able to pick up the item. You can get rid of items in various ways, such as consuming one, equipping one or dropping one. This should make the handling of full inventory be a bit smoother.