I would prefer limited arrows from a mechanical point of view. The fact that you can run out of ammo would bring more depth to tactical combat. Do you save your arrows for a situation where you really need them and use melee weapons in easier fights? Is your archer build versatile and good with a melee weapon too? With unlimited arrows you can just go all in on ranged without having to consider that at all.
I wouldn't mind a system that would automatically retrieve some % of unbroken arrows after combat though, because carrying 700 arrows is a bit silly too.
