Paperdolls are the mainstay of an inventory management system, integrated late in the Ultima series. With it, the armour, weapons, and equipment are managed using an interface that looks like the person in question, or at least has a humanoid shape.
The development of the paperdoll system started with Ultima VI, when the whole interface was rebuilt for mouse control. The item slots were separate and appeared on a stylized - but generic to all characters - doll art, where the item in question was equipped. The same system was used in both Worlds of Ultima spin-off games; Savage Empire introduced new paperdoll art for different types of characters, but the addition of truly individualized paperdoll art for each party member did not appear until Martian Dreams.
When the interface was again rebuilt for Ultima VII, the system was kept the same, but the presentation of the art was vastly improved. All party members now had large, individual full-body portraits. This art is shown in the gallery below.
The system of Ultima Underworld and Ultima Underworld II actually was a mix of the old and the newer system soon to be unveiled; armour now was pulled directly onto the Avatar, and the doll art showed the hero wearing said armour, while weapons and items still were managed as per the old slot system.
A complete changeover came with Ultima VII Part Two. The paperdoll now held everything: armour, weapons, items, and carrying containers. The art showed a realistic picture of how each character looked with his or her items equipped, with a certain few odd items still showing in a separate item slot. This system was again used for Ultima VIII, although it only applied to the Avatar - the sole party member.
By the time of Ultima IX, the paperdoll system had been abolished, in favor of pulling the items directly onto the Avatar sprite.
Here follows all the paperdoll art from Ultima VII: