Haha, I couldn't have said that any better myself. My image of taverns in a fantasy setting totally comes from a mix of Forgotten Realms books and even more so from the Prancing Pony in the Fellowship of the Ring.
Speaking of the Prancing Pony, another thing Taverns ought to be used for is to MEET someone inconspicuously, just like the Hobbits were scheduled to meet with Gandalf, and instead met with Aragorn. At some point in the main story, you should be given a letter to meet an important person in the dark corner of a tavern.
As for the people constantly saying "blah blah, screw taverns, make the game alive, blah blah," making the taverns more dynamic WILL make the game more alive. It will accomplish strengthening the overall CULTURE of the people of the game, it will make many quests more BELIEVABLE (if they're used for that), and it will make the people itself more believable.
Essentially, this argument you are all making amounts to this: "Screw graphics that make the game look real! Instead, they should just focus on everything to make the game better." As if improved graphics don't make the game better /facepalm. It would be like people arguing that if they improve graphics they won't be able to improve other areas as well. Likewise with fleshed out and revamped taverns,
which have always been a STAPLE to the fantasy genre.Drunks in taverns hitting on the waitress:
A side quest could be being a BOUNCER and dealing with a**holes who bother the waitresses. Or just a good opportunity for a fight/meeting a new character in the story.