By far my favorite feature of Daggerfall was the ability to make advantages and disadvantages in character creation, and modify the characters pre-standing reputations with generic factions. This added a whole new level of character customization, and added lots of non-LARP roleplaying value (non-LARP meaning it actually affected the game, and isn't just you "pretending")
If you haven't played daggerfall:
http://www.uesp.net/wiki/Daggerfall:ClassMaker
Advantages and Disadvantages: was a feature in which you could define up to eight factors for both "advantages" and "disadvantages." (eight for each) depending on the magnitude of the advantage or disadvantage, it would raise and lower a "difficulty" slider that affected how quickly your skills raise.
So for advantages you could get things such as:
- Increased magicka ability (1.5x intelligence, 2x intelligence, 3x intelligence)
- Weapon expertise
- Rapid Healing
- resistance/immunity to (fire, frost, shock, magic, etc)
- etc
And for disadvantages you could get stuff such as
- Inability to regenerate magic
- Weakness/Dire weakness to (fire, frost, etc)
- Damage from (holy places, sunlight)
- Forbidden materials (iron, steel, silver, etc)
- etc
And like I said, depending on the magnitude of the ones you pick, it raises or lowers a difficulty slider that affects how quickly your skills advance.
Reputation is pretty straightforward, you can change your standing reputation with Nobility/Scholars/Peasants/Underworld, so if you want to make a seedy scumbag character you can make nobility and scholars hate him, and underworld/peasants like him.
These two features were great because if you wanted to, you could design a character exactly like you wanted them to be. If you wanted a past criminal who is inept at magic but great at stealing, you could make it so.