For graphics mods, your best bet is to check out PlanetElderScrolls.com and browse for any that appeal to you. Better Heads, Better Bodies and Better Clothes are well worth getting at least.
For gameplay mods, I'd suggest Morrowind Comes Alive, the LGNPC series, the Dialogue Request Mod and State-Based Hitpoints as a good base. I don't know if the Morrowind Code Patch works with the Steam version or not; it's not vital though.
People will say to you that you should play through unmodded first - personally I think that's up to you.