Right now the cities are built to house exactly the amount of NPCs you find there. I'm guessing more or less every city has exactly enough beds to house each present NPC (give or take a few, and excluding inns), which is all very orderly and nice, but what about people who are not present? In a logical sense, you'd always have a certain percentage of a city populace that you'd never even meet, or that would be somewhere else entirely during your stay at that place. Where are their beds and houses? Or where do all the guards come from? Are they bred in the local barracks? For instance, mistvale keep in Riften has maybe 10-20 beds for its guards, but where are their real houses, and families? Wives, children, parents? I'm guessing they all have to come from somewhere, and I don't think every guard in every city is imported from cyrodiil or another part of the empire. Local law enforcement is usually exactly that; local. Especially in a place like Skyrim.
I don't feel like the city needs any more content, per se. It's just that one has to wonder where everyone comes from. There are frankly too few houses. I'd very much like to see a mod that fixes this. I don't even have to be able to enter half of them, I just need to see that it's actually a town, with people in it; not a place where quest NPCs gather conveniently to make it easier for you.
And while you are talking about this... it makes me think how limited the 'big battle' scenarios are. They should change up the game play or something to allow for hundreds of soldiers to fight at once. I'm not sure how it would work, but it would be awesome to have an actual battle.
I was just thinking about Bard's Tale... one of the first computer RPGs I played on an Amiga. You were in one city called Skara Brae, and it had several temples, shops, taverns, inns, etc. This was 1986.
I wouldn't mind more houses... empty even, but make me believe more than ten people live in each city.