Does anyone know any mods that add more life to oblivion, eg make it more lively, more colourful? I have cluttered roads and cities.

You want to be VERY careful with this idea. Adding NPCs to the game is a sure way to slow it down and cause problems, not matter how powerful your rig. Each "actor" takes up not only it's own processing time, but adds to what the other actors have to check. It's an exponential curve. Take a look at http://www.gamesas.com/topic/1516419-do-any-mods-or-tweaks-reduce-the-cpu-load-of-oblivion/#entry23935517 in the "Do any mods or tweaks reduce the CPU load" thread.

Whatever you decide on, use a "mod manager" such as Wrye Bash, add only one such mod at a time, and test extensively before adding another.

-Dubious-