I know Morrowind was made with PCs in mind, but it is still dumbed down, even if not due to consoles. Oblivion is more dumbed down...
I wouldn't say Morrowind was dumbed down. Yes, there's less skills, less factions, and dungeons are less intense. But in exchange, players were given an open, persistent world, with a then (and still) mind-numbingly fine attention to little details. Morrowind's locations aren't as generic as Daggerfall's, but to this day I still find interesting little things in the vanilla game that I had not the last time I played. Many will say Morrowind was not a step forward or a step backward, but a step to the side. Daggerfall praised complexity and an open-ended world. Morrowind had a bit less complexity but still provided a fairly large playing area, with new unparalleled levels of detail and lore. I always find myself roleplaying the most with Daggerfall, but Morrowind definitely set a new standard in the series for as far as how immersive the world around you is. It was a fair tradeoff.
Oblivion didn't do any of that. It continued Morrowind's path of skill and gameplay cuts, but nothing of worthy value was given back in return. We got some oversensitive physics, hideous FaceGen technology, traps, and Patrick Stewart. It wasn't worth it the way it was when Morrowind was released.
That's the problem.
...but can that actually be attributed to consoles?
I think the main difference is in the changing developer teams. The Daggerfall team was by far the most dedicated and ambitious of all - they had so many great ideas that didn't make it into the final game, but their goal to achieve the ultimate open-ended freeform world still produced some very nice results. With each game, it just feels as if the developers are becoming less and less daring, less and less willing to dream. Remember that Bethesda is now a large company and they have publishers breathing down their necks, much moreso than back in 1996. They probably want to play it safe now...