See, objects have Power. I think that's the reason babies love remotes so much. They don't know what they do, or that you can buy a dozen for five dollars at Goodwill, but they know they have power, and that they do something. Players in role-playing games think the same way, I've noticed. You can load a party up with coins and gems and they'll be pleased but unimpressed. You show them a laser rifle or a sword that glows in the dark that they can't get? They'll freak out and immediately start scheming over how to get it. Even a mundane object with neat engravings or a name will immediately be someone's new favorite toy.
I don't think there's anything wrong with monetary treasure, per se. I think it's great, and if you're doing your job right as Dungeon Master there should be plenty of ways for your characters to spend it. I do think, however, that if you want to promote creative play, you need to include non-monetary incentives and rewards for player action. This doesn't have to be magic items, even. Have you seen medieval treasure?
People will put gold on anything. A lot of the stuff I've posted here is of religious significance, too. When the church has most of the gold, most of the gold goes on things the church owns. Also, different things have different value to different people. Kings and lords and churches have money, but the common people don't always have that luxury. The villagers with bandit trouble won't always have a big pile of cash for the PCs when their job is done. In Seven Samurai, all the townspeople can promise is that the samurai will be able to eat their fill. Sometimes that's all it takes.
Likewise, I think players can learn to look beyond a sack of gold or a gold cross for what they can take back to town. The bandits might not have any cash, either. That's probably why they're bandits. They might, however, have a big pile of swords and axes and mostly-intact armor that someone is going to have a use for.
I've been thinking about how I can apply all these ideas to my home games. I run 1981 Basic/Expert as my primary ruleset, and it handles money in a kind of frustrating way. All the equipment available to the player characters is priced in gold pieces. Weapons, food, iron spikes, everything. You can take this as a simplification, or a holdover from the original D&D, and just roll with it. You can get different equipment tables, maybe from AD&D, but then you have to have an entirely different book at the table and you could just be playing AD&D.
My idea is different. Everything retains its value. The equipment tables stay the same. However, after character creation, there's much less liquid cash to go around. Those axes and swords you grabbed from the bandits? You better grab them all because they're what the bandits put their money into, and I bet the peasants sure would be grateful for the stuff. The treasure the bandits stole? It's a bunch of gold crosses and tapestries and silver plates they've been trying to fence for months and now that's your job. I don't plan on taking away treasure or making the game harder, but I want to put less of an emphasis on just giving out coinage willy-nilly. I think there's a better way. Maybe it'll work. Maybe I should just go play Flame Princess and use equipment tables that make more sense.