What modelling/texture utilities are the easiest to use?(hopefully good ones)

Blender and GIMP. I'm not sure if there's really "easy" 3d tools but I learned to use Blender quite quickly.

For general texture work, the "big three" are Paint.Net, the GIMP, and PhotoShop. If you haven't worked with a paint program much, I would recommend Paint.Net. It's free, easy to learn, and can do most of the things you need to do to create and modify textures for Oblivion. Also, it can directly save and load the .dds image formats used for Oblivion textures. Many swear by the GIMP (and some swear at it). It's free and nearly as powerful as PhotoShop. However, it's not easy and you may find the learning curve rather steep. You can get plugins for any of the three to create normal maps from bump maps, and plugins to save and load .dds files for the GIMP and PhotoShop.

There are a lot of texture utilities that can be very useful, although you probably won't need them for awhile. In the following, (f) means free. For creating or tweaking normal maps, there's: NVIDIA's Texture Tools 2 and equivalent plugins for PhotoShop and the GIMP (f), ShaderMap (f), ShaderMap Pro, CrazyBump, xNormal (f), and nDo (f). For computer generated textures (procedural textures), programs with reasonable documentation include: MaPZone2 (f), the procedural texture generator in Art of Illusion (f), Genetica (not free, but the Wood WorkShop subset is), and the Filter Forge plugin for PhotoShop. For making textures seamless/tileable, there's Texture Maker, Seamless Texture Generator, and ImageSynth 2 (standalone and plugin for CS4 and later versions of PhotoShop). You can find further information on any of these by googling the names given here. If anyone knows of a significant, current program that should have been included here, please post (I purposely left out 3D texture tasks like UV mappers, 3D model painters, etc.).

For modeling, if it's for Oblivion and you have to ask, the answer is Blender. There are many commercial programs, but spending a grand or more for software before you know if 3D modeling is for you isn't a good idea. For a discussion of Blender versus other free modeling programs, see: http://www.invision.tesalliance.org/forums/index.php?/topic/967-modeling-programs/. The problem with Blender is it does many things (modeling, video sequencing, animation, photo-realistic rendering, etc.) and these tasks are not well partitioned in the current stable version (2.49b). So, you may be doing 3D modeling and find the buttons you need mixed in with ones for other tasks (radiosity!?). There is a completely revised version that does a much better job of partitioning the tasks (2.5x), but it's barely beyond alpha now. If you do decide to download Blender, there are several other files you will need to create content for Oblivion. Your best bet is to check out: http://www.tesnexus.com/downloads/file.php?id=12248.

Good luck--you'll need it!