You know, instead of "Have you been to The Fighting Chance recently?" "Yes I have", you hear "I thought you might like this necklace..." "Is it strong enough to choke annoying Bretons?"

Random NPC "I saw a mud crab the other day horrible creature"

Random NPC "I can't stand the sight of those creatures"

Random NPC "Without question"

Yeah I agree I hope they improve on that.

Do you mean passing comments by NPC's or actual chat up lines.

As this will go one of two ways.. based on Red ridding hood.
One: Hunter "Keep the wolfsbane around at night, especially out in the woods werewolves abound".
"let me accompany you to your destination".
Two: Woodsman "I've got a big chopper, and it's itching to split your big nosed grandma".

I really hope you meant the first.

based on whats been said about non essentail npc dialog I am not expecting to see any depth whatso ever.

hopefully they will include more dialogue options when arrested other than resist arrest, pay gold, and go to jail.

If you mean between NPCs, I sincerely hope so. I don't know how hard that would be to implement however (I mean having a relationship develop between NPCs, completely independent of the PC), although I'd still find it funny if one person kept coming on to another and constantly got shot down.
As for between the PC and NPCs, the idea of maybe flirting to get extra information (slightly like the speech checks in Fallout after certain perks, though not completely the same) could be good. I don't think it should go further than that, although I'm aware others disagree.

NPCs trying to chat each other up? What that would be is a hilarious (as in I want it in the game, it'd be priceless) fiasco.

NPC1: "Ah, fair Nord maiden, how my heart does thrill at your very presence!

NPC2: "I saw a mudcrab the other day..."

NPC1: "Please agree to keep company with me a while, I feel I cannot live without your love!"

NPC2: "Glarthir turned up dead. I guess someone got tired of his antics."

:D

Honestly, it's not too much to make a "Computer as a Social Interactor" it seems to be something that's been done before, just not in games. I'm sure that if it's included the conversations will make sense, enough quality control is poured into these games to make sure that such simple things are taken care of.