After watching a bunch of cloth physics vids on YouTube, it would be awesome if that was in this. I'm not even thinking about the PC, since I play in 1st person, but it would certainly add a lot to the NPCs and make the game world more real and believable.
People would argue that cloth physics would put more strain on performance, and I'm sure that would be true. How expensive is it, though? I'm no expert on the topic, but is it really a black and white thing, or does there exist a happy medium in cloth movement that wouldn't effect performance to a troubling degree?
In the end, though, it wouldn't be game-breaking for me if cardboard clothing was still all the rage, but I'd be a little disappointed if there wasn't
some cloth physics implemented, even if it's a basic implementation.
http://www.youtube.com/watch?v=OdbYsHbGYmU
This looks amazing to me. The part of the video where the character goes up and down stairs looks impressive as well. Cloth physics aside, I hope animations in Skyrim will resemble that... but that's for a different thread