The armor sounds are still there. As far as I can tell, two things happened:
1) The volumes were significantly reduced, or maybe they changed the sounds. They do seem more subdued in any case. Or to some people, less annoying.
2) A number of bugs were fixed. Specifically, armor sounds incorrectly matched to armor types. They seem much more appropriate, at least on my characters. Also, remember how pets used to jingle? lol
Generally speaking, I've noticed you can't really hear those sounds that much if there's any sort of significant noise or music playing. Try turning down everything but effects and you'll probably hear them.
Oh, and something else... If you turn the audio quality slider all the way off, the armor sounds disappear. If you turn it to minimum + 1, the armor sounds (plus footsteps) only play for you, not your party members. At middle or above, it seems to play for everyone. I haven't been able to figure out if the higher settings do anything more.
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