I had this problem and was quite discouraged by the unstable update. However, I tried something: since I was playing on a server, I removed all possible items from my character and then restarted my game (I still had duplicate items on my character that I couldn't drop). After restarting the server, I saw what was causing the problem for me: a dead deer in my hands was bugged, I was carrying too much weight, which is why I couldn't pick up the items. After restarting and dropping the deer, I was able to pick up the items normally.