So when I heard that in Skyrim you could actually be friends or enemies with people, I was excited because in Oblivion, the only benefit to having a person like you was them smiling their ugly faces or giving you good info ect.

In Skyrim what kind of AI are we talking about? Will you be able to make friends and do stuff with them? Or what else will you do?

If you make enemies, will they try to hurt you?

All we have is speculation and marketing at this point. We'll know more about the scope of the AI system once we get some actual gameplay videos and first hand accounts. Hell we all remember how hyped the Radiant AI was in the trailers for Oblivion and we know how that turned out...

there is still alot of speculation on this, it is said the game will be like that, but it is also said that not every npc will have a in depth conversation line either.

Take what the devs are saying with a grain of salt and wait until you see some gameplay before you get all excited. I doubt the AI will be groundbreaking, just an improvement over Oblivion which wasn't that impressive to begin with.

Better than any other game on the market at that time.

well yeah, it doesnt make sense that you should be able to hear the life story of every shop owner in the game.

My guess:

Friends:
Might help in a fight (with a reduced confidence)
Might lower prices for you
Might give you a gift item every now and then (like the Kings in Freeside)
Might run for the guards when you are atttacked
Might not run for the guards when you attack someone else (if they have a low responsibility)
Might be more likely to return something you drop.

Enemies:
Might not return anything to you when you drop it and might take it
Might raise prices on stuff in their shop
Might try to bully you into giving them money
Might challange you to a duel
Might try and trick you into a dark alley holding hired mercs to kill you or something similar.
Might vandalize your house.
Might use more vulgarity against you.

Key word is might, we havent seen any gameplay vids of the AI.