Having prosumer audio recording equipment and software (Cubase, ProTools, small & large diaphragm condenser mics, etc), I am confident in saying we will have outrageously long development times (they're long as it is) to even come close to the content found in Morrowind. On a personal level, I really don't care what other RPGs are doing--The Elder Scrolls was all about content, and I could stand to read more dialogue rather than listen to the same stuff. If they go voice acting, they will be more particular about the quests they make in the game--rather than making a vast range of little to large quests, which I enjoyed. Are you willing to sacrifice a substantial amount of game content in order to hear some voice acting that may or may not be good? I don't know about you, but I read plenty of books and am fully capable of imagining voices, myself. While I agree Fallout was an improvement, I still can't help but wonder how much more dense the gameplay and content would have been if they didn't spend their resources on voice acting. I recently went back and played (and beat the MQs for) Morrowind, Tribunal, and Bloodmoon; I found no lack of immersion compared to Oblivion and Fallout.
If we wanted to imagine things, why not imagine a fantasy story in our heads with awesome combat and everything we'd want, no need for games at all, or movies!
the thing about the dialogue as it is now is that the NPCs don't remember what they have said, which is really basic stuff: card game-games use this type of "memory" to stop the same card beeing drawn twice, which is something the NPCs lack when saying the same time 4 times in a row. That's all they would need to do for it to instantly be better.
After that, the next step would be smarter replies and more in-deapth meaning with the conversation, perhaps you could confront a NPC about what he just said to get more information?
The next step could be three or four people talking to eachother, this would be a step closer to realism and would be cool in my opinion.