One at a time, Doug. That's what I suggest, if you feel - as you say - overwhelmed by Oblivion mods. And, hey, you're hardly the only one! ... Just one of those who've actually come out and said it.
So, grab a mod you like the look or sound of, and add it, checking the documentation to make sure you have the prerequisites first, and you've done everything else you might need to do. Try it out, make sure it does what it says on the tin. Do the same for each one...
First things first though - get the latest official SI patch, then the Unofficial Patches for Oblivion, Shivering Isles, and - if you have any of them - Bethesda's "official" mods (i.e., DLC, like Knights of the Nine). Also, get OBSE. And Wrye Python, followed by Wrye Bash. Ensure that you have one version of BSA Redirection set up,
and only one. Keep an eye on things like texture, mesh, or sound replacers - the order you install some of those in will determine which one's actually going to "be there", so to speak; the most recently installed wins, in case of conflicts. Sorry if you already know this much, but many apparently don't. Fast Exit 2 is well worth adding, as are Streamline and Oblivion Stutter Remover. Also, you might need Pluggy and possibly Ely's Universal Silent Voice and Ely's Uncapper, depending on other mods you install. Refscope (or FormID Finder) can help you determine what's gone wrong, in some cases. BOSS is a real life saver - make sure you use this, and update the masterlist often. Using the BOSS Masterlist Manager (or "BOMM") helps greatly - only usable if you have a copy of MS Word installed.
There. That's the absolute essentials, plus a few suggestions of things I consider vital additions.
Otherwise, check the [RELZ] threads for latest releases here, check the Nexus for popular / frequently downloaded mods (or whatever else appeals there), and also do go through Tomlong's site (linked to by its creator, previously) - there is a wealth of information and solid advice there.