Masterwork Items...are they better?

[Fullmonte]

Masterwork items sell for alot of money, but do they do more damage or give a better chance to hit?

[blackbow]

you can't enchant regular items...masterwork items are the only ones you can have enchanted. That's the reason they're better.

[Lord Plothos]

That's one reason they're better, especially in ToEE, where crafting is a huge thing. Anyway, masterwork weapons will give you a +1 to hit, but not on damage. Masterwork armor has its armor check penalty reduced by one (nice for rogues and such, but that's about it). Masterwork gear like theives tools give you a +2 on related skill check rolls (such as picking locks). In addition, as noted above, masterwork arms and armor can be further enchanted, while normal stuff can't.

[Galuf the Dwarf]

Just to note with what Plothos said: Magical items can also be further enchanted as well, but you'll find that there normally aren't many magical versions of many weapons, but there will likely be masterwork version that you can enchant yourself.