I have started to "upgrade" some of my bags/containers for bigger ones, and I noticed that I can't auction or sell the empties! Is this a "feature" or a bug? >.>
Storage is storage. Even having bought several 'bigger' bags, the smaller ones are useful for lugging junk around. When my inventory is full of containers, then the smaller bags will get re-purposed or given away.
I use my small bags as "Pay It Forward" gifts for newbies. Fill it with things that lower levels will find useful, and give it to them as they enter the game.
A game feature which i've seen many newer players question but I think it's very Glitch as it encourages interaction in some way.
Some people give them to new players they come across. Some ask in Global if anyone wants them. Some sell them via trades. Others randomly drop them around newbie areas such as Groddle or by vendors. Some people fill them with items, some will put in a little note for the new owner and some leave them empty.
Choice is yours what you decide to do.
I've found bags in lots of different areas in the game. People seem to like to hide them up high in trees for someone to find them. They are often renamed "a gift" etc.. I like to give bags to newbies because it's a somewhat high priced item when you're starting out that is very useful. You can also put bags into your cabinet storage slots if you own a home.
I find smaller bags work well as things to drop in your house full of supplies :P Then when you have a full inventory of bags you can switch them at will to get what you need.
Disclaimer: Works best with a high teleport level. It is unimaginably frustrating to need something and have it be at home and you only have teleport one and decided to set your teleport spot in West Spice or something. Then you have to trek home to recover it :P
I speculate the reason for this is that the vendors won't account for anything that's in the bag, and you don't want to accidentally sell your bag full of tools and only get paid for burlap, do you?