I chose "it's mine, dont touch it" but he picked it up anyway. my last save was 1 hour back so I had to kill him to get my armour back.
it was the Armour Of The Old Gods.
Well, I suppose if I were a beggar I wouldn't be the nicest person either. And I would also take what I could find.
I think he is one of the nicer beggars out there and consider him a friend to my character. If you have Hearthfire, he is especially nice to the orphan Lucia. Not shown in the actual game itself, but she mentions it.
Beggars never pick anything I drop D:
Also, could have just pickpocketed him.
The only beggar I've got no time for is that dike Degaine in Markarth!