Oblivion had a rather dark story. Nirn was being invaded by Mehrunes Dagon and his forces from the fiery depths of Oblivion. However, this menacing undertone was never really shown well throughout the game. The colors made it feel cartoonish a lot of the times, and it could be hard to take something as being menacing and evil when it was so bright and colorful. On the other end, Morrowind overdid it a bit with the dark colors. Every city and town, every area in the game was dark and drab. Some places, especially big cities, should be bright and inviting, while dungeons and caves should feel dark, menacing, and uninviting. Some areas of the wilderness, like forested areas during the day, should be colorful and lively, while there should also be harsher environments like the tundra in solstheim or the desolate wasteland feeling of red mountain.
The most important thing in an rpg's environment is immersion. For the world to be really realistic and immersive it needs to have a mixture of colors, tones, and environments. Oblivion's environments simply weren't varied enough, while Morrowind's environments almost all had the same tone's. Both are amazing games, but here's to hoping Skyrim blows both of them out of the water