At the moment, Durability adds nothing. Repairs are both infrequent and cost nothing after you get your first hammer, making it pretty pointless. I have two ideas:
1) Eliminate Durability completely.
2) Add an element of management or resource consumption to Durability: Repairing consumes hammers at a rate proportional to the quality of item. I might have the power rank of the colors wrong, but the general idea is this:
White items consume 1 hammer to fully repair an item.
Blue items consume 2 hammers.
Green items and Uniques consume 3 hammers.
Purple items consume 4 hammers.
And of course there are blacksmiths with infinite supplies of hammers to buy. If Blacksmithing is added back into the game, it can affect this mechanic as well.