Factors to consider, roughly in order of importance:
- Everyone should have a weapon/implement, armor, and neck slot item within five levels of their own level. These grant the basic attack/defense bonuses that monster balance expects. If anyone's missing one of those, or it's more than five levels lower than their own level, fix that before you hand out any other loot.
- Once you've got the three slots filled, start filling in the others: arms/feet/hands/head/ring/waist. If anyone's got one of those slots empty, fill it before you start replacing items in already-filled slots.