http://bit.ly/1N6cIL. The OP contains the full readme for the new version, but here's a condensed version with most of the changes in bold.
Sorry about dropping the ball on v1.1, folks.

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Introduction
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Tired of all those configuration items cluttering up your inventory? Want to stop loading Grand soulgems with rat souls by accident? Want to carry a few extra 'utility' potions on your travels but don't want them in the way when you need to down a health potion really quick?
Want a separate place to keep all that junk you're planning to sell to the next merchant you come across? Sort your stuff into Storage Sacks!
Storage Sacks adds 10 configurable, carryable sacks to the game,
including one specially designed to facilitate simple one-click selling of your loot. They can be accessed from within your inventory or you can drop them and access them in the gameworld. They can also be accessed via hotkeys, just like normal inventory items. With the included configuration file, you can rename the sacks for ease of identification as well as adjust the encumbrance of each sack.
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Installation
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Upgrading
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No special steps are required when upgrading from an earlier version to version 1.2. However, to be safe, it's always a good idea to backup your savegame before loading or upgrading any mod. If you have trouble upgrading, make a clean save (see Uninstalling, below) and then load the new version; also, post a note on the RELz thread, because like I said, there should be no problems.
You will, however, want to rearrange the contents of Sack 1, which is now the Sell Sack.------------
How It Works
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The Sell Sack
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The Sell Sack is a special Storage Sack designed to let you simply and easily sell your hard-won loot. Simply place items that you wish to sell into the Sell Sack. The value of all of the items in the sack will be tallied, just like the weight is, and you can easily see the value by checking the value of the sack itself in your inventory. Of course, being the way merchants are, you won't get anywhere near that value when you sell it, but it gives you an idea.
When trading with a merchant, the Sell Sack will show up in the list so long as there is anything of value in the sack (that is, the sack's value is more than 0 gold) and the merchant is one who will normally buy misc items from you. In the trading menu you can see how much the merchant is willing to pay for your collection of loot. Once you agree to the sale, the contents of the sack will be transferred to the merchant's inventory, the empty sack will be returned to you, and the barter interface will be closed. This gives the merchant a chance to update his inventory with the new stock. If you trade with him again right away you will see the items you just sold to him (just like always), with the notable exception of items he doesn't normally sell. That is, if you sell a sack full of weapons to a merchant who doesn't usually sell weapons, there will be no way to buy any of them back from him.
The Sell Sack will prevent you from placing quest items or any of the other Storage Sacks into it as a safey measure. However, if you use a utility to remove quest status from an item and then put it in the sack and sell it, you may not be able to buy it back. You've been warned!Technicalities and Troubleshooting
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First off, when I refer to putting items into a Storage Sack, I am of course referring to putting items into the relevant remote container, which you gain access to by equipping or activating the storage sack item. The sacks as you see them are not containers; they're misc objects with a script attached.
Secondly, in an effort to make it harder to accidentally lose a storage sack, every time you open a sack it is dynamically set to be a quest item. Likewise, when you are in the barter menu (trading with a merchant), all sacks except the Sell Sack are set to be quest items. This makes it impossible to sell a storage sack, or to put a sack inside of itself. Quest status is dynamically removed when closing the relevant menu. This means you can drop sacks from your inventory like normal, or put sacks into other sacks without any problems.
However, a number of mods exist that allow you to move quest items; depending on how they work they may mess with this can't-lose-it functionality. In particular, I know that the move quest items feature of Cobl will let you move quest items without warning with a single click - this makes it possible to accidentally put a sack inside of itself.
The mod will catch this and remove the sack from the remote container and return it to you. Likewise for the Sell Sack: it will regurgitate any of the other Storage Sacks or quest items that you may place into it to keep you from inadvertantly losing them.If you happen to lose a storage sack, perhaps by dropping it and then forgetting where you left it, you can open the console (by pressing the ~ key) and entering
set DSSack.Init to 0
and any sacks you are supposed to have but are missing (as determined by your NumberOfSacks setting, see Customization below) will be added to your inventory. This may result in duplicates if you have, for example, Sack 4 inside of Sack 5. When you take Sack 4 back into your inventory, the duplicate will be removed. In short, you can only have one copy of each sack in your inventory at any one time.
Finally, stolen items present a bit of a conundrum. There is currently no way for a mod to tell if an item in the player's inventory (or in any container, for that matter) is stolen. Thus, any merchant will happily buy any stolen items that are in the Sell Sack. Likewise, any stolen items in any sacks will not be confiscated by the guards in the event of the player's arrest and incarceration. I point these issues out not so that they can be exploited (I'm sure people would figure them out anyhow), but so that people don't think it's a bug or that I can easily fix it at this time. Perhaps with a later version of OBSE, but sadly not with v17.-------------
Customization
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By default, every storage sack is named "Storage Sack x" (where x is the sack number, 1 to 10), has a weight factor of 1.0, and weighs 0.5 stones when empty. Included with the mod is a configuration file that allows you to adjust these settings to your liking.
Simply open "DS Storage Sacks.ini" in Notepad or something similar. By default this file is found in your "
\Oblivion\data\" directory; if you prefer to tidy your data directory, you can move the file to "\Oblivion\data\ini\".
The there are three settings you can change for each of the 10 sacks:
SackxxName - The allows you to rename your sacks to easily sort your stuff and keep track of sack contents. I personally like to preface the name with "." to keep all the sacks together at the top of the misc items list.
SackxxWeightMult - This adjusts how much the sack weighs. The total weight of all the items in the sack is calculated and then multiplied by the WeightMult. The weight of the empty sack is added to this to get the total weight. Thus, if you put 10 stones in the sack, and the WeightMult is 1.0, and the EmptyWeight is 0.5, the total weight will be 10.5 stones. If the WeightMult is 0.75, the total weight will be 8.0 stones. One thing to note is that Oblivion doesn't display the decimal if the weight is over 1 stone; that is, 1.5 is shown as 2. The fractional units are still tallied properly to get your overall encumbrance, however. And yes, if WeightMult and EmptyWeight are both 0 the total weight will be 0.0 stones. Knock yerself out. 
SackxxEmptyWeight - This is the weight of the empty sack, which is added to (total contents weight x WeightMult).
In addition, if you don't want to start with all 10 sacks, you can change the NumberOfSacks setting. The minimum is 1: you will always get the Sell Sack. If you decide later that you need more sacks, simply change this setting and the next time you load the game you will receive the extra sack(s). Note that you may get duplication if one of your sacks is placed in a container or on the ground - the script checks if you have each individual sack in your inventory and if not, adds it. As mentioned above in Troubleshooting, duplicates will be discarded if you have more than one copy of a sack in your inventory at one time. Setting the value to less than the number of sacks you currently have will have no effect.
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Known Bugs and Incompatibilites
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No known incompatibilities, other than the 'move quest items' and 'stolen items' issues mentioned above.
No known bugs. I've been playing with this mod (although in a slightly less user-friendly version) for well over a year without any problems.
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Changelog
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1.2 - Added 'sell sack' functionality
- Added option to start with less than 10 sacks
- Added support for moving the ini file to the \data\ini\ directory
- Changed handling of 'sack-into-self' issue
- Improved handling of lost sacks
- Improved handling of multiple copies of a sack in inventory
- Updated to make use of OBSE v17 flow-control functions
- Fixed a number of cut-and-paste bugs in both the ini file and the mod itself
- 12 Jun 09
1.1 - Added ini file option to change the empty sack weight for truly 'weightless' items
- 08 Jun 09
1.0 - Initial release
- 08 Jun 09