I was thinking about how the arrows are going to be much more powerful this time around in Skyrim, as well as more realistic. One of the things that bugged me in Oblivion was the ineffectiveness of armor in protecting you against arrows. In real warfare, arrows would usually bounce off or break on most armor types unless the arrow was extremely strong, or the bow itself was unnaturally powerful (the English Longbow...which I dont expect to see in Skyrim).
So why would there be different arrow types at all if they all do so much damage anyways?
My idea is that armor would deflect arrows of a lower material type (unless you hit in certain locations: head, neck, or armor joints--would not be too hard to script this).
For instance, if the target is wearing steel armor, you would need at least a steel arrow to penetrate the armor and damage him, unless you are a really good shot, otherwise it will deflect or break. If an arrow deflects, minor damage is still caused to the target. If the arrow penetrates the armor, the target still takes slightly less damage then he would if he was unarmored (for balance sake). A new arrow type (stone or flint) would need to be added as the lowest-tier arrow type to counteract fur armor. The arrow penetration would be set up like this.
Stone Arrow--->Fur Armor, (And Unarmored)
Iron Arrow------>Iron Armor
Steel Arrow---->Steel Armor
Silver Arrow----Silver Armor
Mithril Arrow--->Mithril Armor
Dwarven Arrow>Dwarven Armor
Glass Arrow---->Glass Armor
Ebony Arrow---->Ebony Armor
Daedric Arrow-->Daedric Armor
Any arrow type lower than the armor type will be deflected. Of course, I'm sure many of these armor types will change or be removed, so it would be set up differently--but you get the point. I think this would make the type of arrow you use more important, forcing you to observe your enemies before rushing to attack with arrows (strategically selecting arrows). If the leveling system is improved (as they claim), then we shouldnt be seeing every enemy wearing our level armor all the time, so its not like your lower level arrows would become useless after you reach a certain level. I thought of this last night before I fell asleep, wondered what anyone else would think.