Perhaps one of the more interesting aspects of my first Eberron campaign was the effect that shopping has had on the overall tone and attitude of the game. Much of our first session was spent shopping, not for typical adventuring gear, but for household affects that would have very little practical application in the field. Of the items acquired, the most memorable were the +1 Couch of Comfort, the Pan of Perfect Sauce and the now-infamous (in our game at least) Plate of Holding.
In a setting as "high magic" as Eberron, the application of household magics, usually in the form of magecraft items, truly sets the tone of an urban campaign. While I do not typically engage in Monte Haul-ism, I have found that the general level of power within the game has increased dramatically because of these shopping sessions; far from being detrimental to the course of the game, however, this level of power has only served to enhance the "Extreme Adventure" attitude of the game, even before leaving the city of Sharn.
Part of the allure is the shopping experience itself. Though not specifically "encounters" in the strictest sense of the term, making the shopping process interesting is an important part of any game, doubly so when there are so many great things worth buying. Providing a bit of personality to every shopkeeper the players meet can be taxing, but is well worth the effort; players become more involved in the game, and pacing never falters even in what is, traditionally, downtime. Keeping characters interested in the shopping process, through presenting interesting items in an interesting fashion, can also act as a springboard for side-quest-type adventures.
The key to maintaining balance in cases where magical items are an important part of establishing the correct mood, is to ensure that the opponents faced by the characters are also in possession of such items (in roughly the same abundance). When a player character is packing a +2 longsword and a cloak of elvenkind at level 2, orcs and goblins dual-wielding +2 daggers and wearing rings of invisibility. Also of great importance is ensureing that opponents are magically inclined without benefit of such items; NPC wizards and sorcerers, creatures with magical abilities, and limited-use wands or rods are an important part of ensuring that, regardless of the level of magical items in the game, balance is maintained.