I've done...oh about 20k laws/nats lately and I've noticed that it's only ever my large pouch that breaks...not my medium one...am I not using it enough or did they remove the penalty from that one?

Happens to me too. I think only your highest one gets damaged, and if you let it stay damaged and keep using it, only then can your lower pouches be affected.. Just a guess, but thats what it seems like to me.

Well pouches become damaged based on how much essence they hold. I think its about every 125 essence or so. Therefore, you only have to fill the giant pouch 11 times, the large pouch 14 times, the medium pouch 21 times, and the small pouch 42 times for it to break. Since you are filling each pouch once per trip, your best pouch will always be the first to break.