I was not a fan of the change from Morrowind to Oblivion where smugglers and bandits lost their unique names, but I accepted it for the sake of respawning enemies. However, I will certainly not be pleased if I see a bunch of "Solitude Citizens" walking around. I would say I'd just kill them off, but then they would just respawn. :shakehead:
I think the idea is to propagate the fact that tamriel is a big word. Morrowind has a lot of npcs, but there were only like 4000 people on the island of vvardenfell in total, that's a pretty tiny world.
Go out onto a city street. Do you see a name pop up above the head of every person you walked by. Can you just start up a conversation with any random person on the street?
People living in cities have their own stuff to take care of, and they probably have their virtual lives to worry about. Despite what you might think, with Bethesda having a limited VA budget they can only afford to do so much dialogue... by having "generic" or "unnamed" npcs, they can put more work into voicing people who actually have interesting things to say rather that giving useless dialogue to a bunch of nobodies who just aimlessly walk around on the street.