That block of text brings me to the trend I noticed: The games are getting simpler. The number of skills are lowering, NPC's have fewer lines they say, there aren't as many factions, and so on. I've never played Daggerfall, but looking at the Elder Scrolls wiki I can see this, illustrated in the crude charts below.
Game | # of skills
----------------------
Daggerfall | 38
Morrowind | 27
Oblivion | 21
Skyrim | 18
Game | # of Factions
----------------------
Daggerfall | 6
Morrowind | 16
Oblivion | 14
Skyrim | ?
Not only that, but think of the smaller details.
Daggerfall had vampires, were-creatures, and witch covens.
Morrowind had vampires and werewolves,
Oblivion had vampires.
Daggerfall had a massive world.
Morrowind had a smaller world, but an amazingly detailed one.
Oblivion had a slightly larger world than Morrowind, but had less detail.
Morrowind had a great magic system, with plenty of different effects.
Oblivion has a less expansive magic system, and not near as many effects.
And the menu system! I don't know about Daggerfall or Arena's menu systems, but I loved Morrowind's right click menu. It had everything you needed on one screen, as opposed to Oblivion's where you navigate through a set of menus. In Morrowind, you could just pause and figure out whatever you needed too, like if you need to decide what spells to use against something or figure out an enemies resistances. It helped me think through things.
Also some mods aren't possible in Oblivion. I prefer to set up a house I bought to my liking, and Morrowind had furniture mods that let you place your own furniture. In Oblivion, everything uses the Havoc physics engine, so things jostle around even if you're playing as a physically wimpy mage and you're bumping into a giant desk. Don't get me wrong, I love how you can drag and move stuff in Oblivion, but still.
I could go on, but I don't want to have to big a wall of text.
EDIT: I forgot about a few things. One of them is the combat system. I don't know if anybody who's reading this has played Mount&Blade, but I loved the combat system from it. You directed your attacks with the mouse, which also affects what attack you use (similar to Morrowind's movement to control attacks), only the damage done is based on how hard you hit, where you hit, what attack you used. It's actually pretty close to Oblivion's combat system. It added a level of complexity to fighting that I've never seen before or since. If Oblivion's combat system is improved, that's how it should be.
The second thing was AI. Oblivion was way better than Morrowind in that regard, so I don't have anything to complain about there. However, Morrowind had a feel to it whenever you talked to people. There were huge amounts of options for what you would say. That (and the different ways NPC's responded) made it seem like the people you were talking to had actual personalities, likes, dislikes, emotions. I guess having voice actors kinda limits that, but even so, I wish TES could recapture that depth to the characters.
My point is that the series seems to have peaked at Morrowind, and is bit by bit losing what makes it stand out against the hordes of other games. I recognize that the people at Bethesda probably have ideas far, far different from mine, and they wouldn't change what they're doing because a chunk of people feel nostalgic. Maybe I'm in a minority on this point, maybe the series is just being more geared towards the X-Box or something. I don't know. I just wish it would go back to being like Morrowind, only with better graphics and stuff. What does everyone else think about it?