Crowding was a bit of an issue in Oblivion. But one of the bigger issues I had was size. It didn't take nearly as much time as it should when travelling between cities in Cyrodiil. The only way to fix that would be to increase the time scale, but the time scale was already rather high (30:1) and making it higher just gets rediculous. I would've loved to have had a smaller time scale, snd take more game time to travel between cities.
That happened not because of size, but because of land topography. Traveling in Morrowind could take far longer due to the various mountain ranges cutting the world into pieces and the fact that Red Mountain was smack dab in the middle of the map. All travel usually literally revolved around Red Mountain, as no one wanted to travel up and over it to get to the other side. So a trip from the Grazelands to the West Gash could take a VERY long time (several in game days) if you didn't want to use travel methods, or because you couldn't. Even with a map it was easy to get lost in the ashlands, especially when ash storms hit.
I hope Skyrim has blizzards and the such. The topography looks rocky and craigy. One thing that disappointed me in Oblivion was that I never got lost. I want to get lost. I want to fight my way through the wilderness, using my wits and skill to survive. It was always such a fun experience when I came out of the ashlands, infected with 3 diseases, barely and health, no supplies, but damn it, I had made it. Those were game defining experiences.