Loot is not respawning ... as a test, yesterday I traveled to the small, remote town of Kozlovka and literally picked it clean. I picked up every single piece of loot in every house and placed it in the street.
After 1 hour, I returned to the town to verify that all of the items despawned. However, 24 hours after this I have returned to the same town on the same server and there is literally not a single piece of loot and the server has gone through two restarts since the time I originally looted it. This is an extremely low-population server and a remote town so it is highly unlikely that this town has been looted recently by anyone other than myself.
EDIT: it has been almost 48 hours now and that same little town on the same server has no loot (except for 3 ammo spawns) -- loot spawning is definitely broken in some way.
Server (hosted by Gameservers): DayZ IL 2-11 - 108.61.238.237:27017