(3rd edition hardback)
For a straight-up magic system my favorite is still the one from Ken St. Andre & Steve Perrin's Stormbringer. The system revolves around summoning and binding elementals and/or demons. In case you're wondering, the psi angle is that your mind is reaching out to another plane of existence and drawing those creatures to you. The cool thing about the system is that it's simple but very versatile. You do all the usual stupid wizard tricks, like cast a fireball (fire elemental) or make a flying carpet (demon of travel). And it naturally limits magic powers, since demons of combat can be very dangerous. If you pick up a magic sword in this game it could kill you.
In more general terms, I don't see why magic couldn't be done with straight psi powers. You could even use them to explain most superpowers. Super strength is just psychokinesis with no range, fireballs are just a special form of pyrokinesis, x-ray vision is a type of clairvoyance, etc. One thing that really got me thinking this way was Claude J. Pelletier's excellent article "Put Some Magic In It" which used the Mekton II psionic rules as a framework for a magic system. But why bother with separate rules? Why not just use the psionic rules to account for "spells"? There are a few things that standard psionic rules don't cover, like shapeshifting or breathing water, but it's easy to expand the rules to cover that stuff.
And really it just comes down to a matter of semantics.As Jeff R. showed, whether you want your Magic Missile to be a bolt of mind force or a spray of pixie dust is all up to you.