I agree that it's too effective when it comes to robbing the NPCs blind. While you might argue it's realistic that if he didn't see you take it, then how can he know you stole it - you'd think the NPC would hear you shuffling through their stuff, they'd notice that stuff went missing, etc.
This is especially bad with NPCs who don't move and aren't facing anything particularly valuable.
I have a few ideas that might help fix this - maybe increase an NPC's field of view based on the character's sneak level (though I don't know if this is possible with the engine), or you could add a bit of a cooldown on the sneak ability after a character has been seen (something like 4-5 seconds from the last time he was seen by an NPC - this could also be reduced by sneak level).
At the very least I'd like to see NPCs have a lower opinion of you, if things have a tendency "magically disappear" when you're around - even if the NPC doesn't catch you in the act.