Seems weird that items would be banned for purposes of balancing, when items probably do a better job of balancing the characters than just about anything else in Smash Brothers.
it's not because of balancing really. while it gives lower tier characters somewhat of an edge, it's also completely random, and random shit in fighting games is more of a curse than a blessing really. imagine playing street fighter and suddenly losing because your friend's fireball decided it would do 100% damage. or the stage kills you.
that's why ssb/ssbm competitive play is all about playing on flat stages with as little objects native to the level as possible (Final Destination, Kirby's Island, Fountain of Dreams, Battleground and Yoshi's Island are the stages usually kept for that) and no items. though the game IS unbalanced, the tier differences aren't that big either unless you master your character and mindgames in and out (and honestly, only Ken's Falco is at that level of mastering the game).