Solution is to hire good writers.
I think that's it, if you want the characters in your game to not be boring, you need good writers, if you can't do that, the amount characters have to say isn't going to make them interesting, one way or another. Though this is probably the first time I've seen someone say that Oblivion's NPCs had too much to say. Usually, it's complaining that they had less to say than Morrowind, though as I see it, the large amount of dialog in Morrowind didn't help matters at all, considering that you could ask several different people about one subject, let's say, rumors, and have them say the exact same thing, without even one word changing. More dialog doesn't make your NPCs unique if this dialog is generic and tells us nothing about who they are beyond what job they do.
Unfortunately, the fact is that when your game has over a thousand NPCs, you can't really make sure each of them is unique. Creating an interesting character takes work, you can't just put a merchant in the game called Bob and expect us to automatically like him. Bob needs to have a personality, he needs to have things he wants to do and reasons for wanting to do them. He needs to be a character, not just some random faceless person, if we're supposed to care about him. That's not to say that we need to here the life story of every bandit we kill, but if we're expected to care about a character, there must be something making it worth caring what happens to that character, and this isn't that easy when you have as many characters to work with as past Elder Scrolls games. In general, the more characters are involved in your story, the harder it is to ensure that they all get the attention they deserve. Many RPGs avoid such a problem by having only characters who have a role of some importance to play being ones you can talk to, whether they're important for quests, offer a service or some type, or just offer useful or interesting information, most other people just give you some generic line if you try to talk to them and don't have any actual dialog, this way, the writers can focus on the people you can actually talk to, however, in past Elder Scrolls games, you could talk to any random person on the street, though they rarely had much that was actually interesting to say (Though this doesn't mean they just didn't have much to say at all.) which I suspect is why Bethesda seemed to have such a hard time creating interesting characters. However, in Skyrim, there's been an indication that most characters will only just give you a rumor if you talk to them. My feelings on this are a bit mixed, but it may help Bethesda to ensure that the characters important enough to have actual conversations with will have some degree of personality, we'll see.