Its a perfomance issue plain and simple. I just watched the gameswelt interview with Todd and he said they decided to make another Elderscrolls for this gen of consoles because the tech wasn't holding them back. While I'm glad of the decision, I think thats a load of bull.
I agree with Crytek's lead programmer. In a recent speech he demanded the next gen of consoles have 8gm or ram instead of the measly 512mb they posses now. Thats 16 times as much speed and overall thinking power. Just think, If the imperial city had had 16 times as many civilians, just as detailed as they were...
It's not 16times as much speed. It's just 16times as much memory.
But yeah, with how cheap memory is, I'm not expecting any less than 4GB for the next gen, which considering the Game consoles don't have to run a burdening OS and other applications like a PC, is more than enough... to start. 16GB might be a bit much for a console though, most PC's don't even come close to benefiting from that much, much less actually utilizing it, but I guess with static console hardware, it's better to have it, and not need it?
When Todd said the "Tech wasn't holding them back" He meant in terms of Game design I think, not so much in the snazzy graphical (NPC count is Graphical, it's a rendering process to create more NPC's on screen) things, which he acknowledged, as tech gets better, most of the benefits are graphical.