There are loads of graphic & sound mods out there, big and small. But my favorite "basic" setup is usually this:
http://planetelderscrolls.gamespy.com/View.php?view=oblivionmods.detail&id=3813 or http://www.tesnexus.com/downloads/file.php?id=18677 ( Vibrant Textures are a bit more nice to your computer
)
http://www.tesnexus.com/downloads/file.php?id=20053
http://www.tesnexus.com/downloads/file.php?id=18305
http://www.tesnexus.com/downloads/file.php?id=30054 + http://www.tesnexus.com/downloads/file.php?id=37825
Also recently discovered http://tesalliance.org/forums/index.php?/files/file/797-insanitys-improved-armoury-compilation/
Those 5 mods should make your game look very pretty. Be warned though, it can grind even a powerful computer to halt.
As for game overhaul, I usually go with OOO + MMM as it is quite simple to install and not as demanding as FCOM for example.