The technology improves over time. That's a given, and Oblivion was proof of it.
The ability to make the characters follow schedules, voiced dialog, physics to inanimate objects, and the overall graphical improvements over older games were huge steps forward. Unfortunately, the very nature of the underlying game was scaled back and simplified (perhaps partly as a result of the limitations of voiced dialog), and the "accessability" came at the expense of versatility. Many of the basic game mechanics (spellscasting, alchemy, enchanting, lockpicking, repair) were either simplified (from a % chance of success, to a "can't try or can't fail" system) or replaced with mini-games which had virtually nothing to do with the skill involved. The improvements to the task interfaces were in sharp contrast to their decreased functionality. How many OB players are concerned with raising their Speechcraft or Security skills? The excessive scaling in OB made it pointless to level up, since the world levelled with you and kept you on par with everything else, no matter what you did. That broke the fundamental concept of RPGs, where the point is to have the character go from "weak" to "strong", because the definition of weak and strong changed as you went.
The depth of the conversations went from 3-20 dialog options in MW to about 2-6 in OB, and less of the dialog was dependent on your actions. There were random gossip and local info topics in both, but Morrowind had a lot more topics (and even items within those random topics) that appeared as you explored and "unlocked" those topics. The interactions and conflicts between factions in Morrowind were all but missing in Oblivion (aside from a few "black and white" ones between the FG and Blackwood Co., etc.), and the few that existed had little or no effect on gameplay. You could somehow become the head of virtually all of the factions with the same character, and didn't even need a high level or any particular skill in that faction's profession to rise to the very top.
Morrowind was more "restrictive" on what you could do with a given character without having to work to "earn" it (requiring certain skills and attributes to advance), but gave you an incredible amount of freedom as to what you could untimately achieve. Oblivion allowed you to do just about anything "permissable" with no restrictions, but what was permissable was a lot more limited; you could be anything in the game, or everything, with relatively little effort, and that made it all feel shallow and pointless.
If Skyrim manages to improve on the technical aspects, as OB did over MW, while giving us back even a fraction of the sense of "risk versus reward" (as in MW and DF) and sense of satisfaction for accomplishing something that's not being spoon-fed to us, then it has the potential to be more than either of its predecessors. If it goes farther down the road of "streamlining" and limiting the character's long-term potential for the sake of short-term accessability, then it will end up as an all-but-forgotten disc on the shelf in a couple of years, overshadowed by whatever "latest and greatest" disposable entertainment is hot at the moment, where MW will STILL be viewed as a "classic".
Speechcraft and security are actually skills that I used a lot in Oblivion. And the minigame that was added for both persuation and lockpicking was dependant on your skill. I actually like using the minigame for lockpicking because it makes me feel like I'm the one picking the lock- not a random number generator that figures in lock difficulty vs. my skill level. I always found speechcraft to be useful in getting information and winning people over. You unlock a lot of topics when people like you more. And I still stand by that there is more versatility in the dialogue options in Oblivion, whereas many npc's shares most of the topics in Morrowind, and it became repetitive. Both had repetitiveness of course- But Oblivion tried to keep it unique to different characters rather than having everyone in an entire town repeat the same things, or everyone of a particular race, or class, etc.
Personally, I find the % chance of success to be much simpler than what they upgraded it to, regarding spells. The spells in Oblivion were more enjoyable to use. And it makes a lot more sense too, imo. I hated trying to cast a spell countless times in *Morrowind and constantly failing. Same with using a weapon. It got annoying. I don't think of that as 'versatility'- it is just a chance generator. Can't get much simpler than that. The new system is much more enjoyable and, I find, has it's own realism, especially if you don't feel like you are rolling the dice every time you try to do a basic action.
I did not see a decrease in functionality in Oblivion. Everything functioned just fine. If anything, there were many more options in multiple areas as compared to Morrowind.
Regarding earning things in Morrowind... trainers could get you high levels fast and the levitation spell could get you to wherever you needed to go easily. Wether that be escaping enemies, skipping mountains, etc. And after raising the speed skill high enough you could practically reach just about any nearby destination as soon as you started running. (which can be, again, facilitated by merely using trainers.- the money is easily aquired through stealing in Morrowind.)
There were plenty of conflicting factions in Oblivion: Blades vs. Mythic Dawn, Mages Guild vs. Necromancers(not really evil, just outlawed), Fighters Guild vs. Blackwood company, Dark Brotherhood vs. sub-Dark Brotherhood factions, All of Cyrodiil vs. Oblivion(of course)- and all of these had plenty of quests associated with them. Not as many as inMorrowind, but why should the amount of different factions make the ones that Oblivion did have any less?
I do agree that the leveling system in Oblivion was bad. I missed having monsters be a set strength and inhabit certain areas territorrially such as in Morrowind. Knowing to look out for them and having to compensate ability and resources was fun. They have recognized this and have fixed in in Skyrim, I believe.
There was quite a bit you could not do in Oblivion unless you worked- especially after the release of Midas Magic. Those magic spells, especially the powerful ones, were quite difficult to earn. And as you said, you could not use various spells without the required levels. Trainers would only train you 5 levels each in Oblivion too, most of the time you had to train your skills yourself.
Having there be skill requirements for guild positions is a minor nuance that does not effect the gameplay much. To make a big deal about it is, well, nitpicky. In the end the quests are what really matters, it is your service to the guild that raises your position.
Streamlining does not mean spoon-feeding. And you just said earlier that in Oblivion there is never a sense of really getting stronger because everything leveled with you. That indicates difficulty. If you are actually referring to the compass- you will be able to turn that off in Skyrim if you wish. I personally find it to be very useful.
The fad games have never sold me out over the TES games. They have always, including both Morrowind and Oblivion, won me over all games that have come out since. Skyrim will be the first game that I love and regard more highly than Oblivion. I could never imagine myself EVER regarding any TES games as backshelf games.