The goat video to end all goat videos to end all goat videos.
Have bags outlived their usefulness? Just like reagents and ammo, I think its time they get removed from the game entirely. I hope Blizzard uses the next expansion to retool the inventory system and utilize their new UI methods (ex. mounts and pets).
I like how The Secret World handles inventory and I wish WoW did it the same way. You have an expandable inventory and you can create as many custom bags as you want to help you sort your stuff. If you run out of room you can just pay an in-game currency premium and give yourself some more. There are mods that do half of this already but it'd be nice if Blizzard just went all the way with it.
There are obviously other considerations -- the effect on tailoring, for example, or the amount of database traffic Blizzard can handle (which prevents us from having unlimited bag space).