I'd rather not have that, especially since most of the time you need to pass items off to other characters anyway. Get a new item you go to the trade window and trade+equip to who you want it on. I don't want to auto-equip an ugly helm or leather cuirass that does nothing for my spell caster just because they have nothing in that slot yet.

Auto-equipping does nothing to that scenario - you still trade+equip, only difference is the gear slots in automatically if there's space, saving the time of equipping it the first time around.