I hate having to make that decision because I like to have at least one of every sword and every magic spell, so it drives me slightly mad having to decide. The first time I did, I ended up choosing, only to reload my save outside of Narshe so I could choose a different option.
These days though I tend to take the Sword, simply because I never bother with the Esper and I can learn Ultima from the Paladin Shield, even if that is a right pain to get.
