I think the combat is improved for the most part. It's a lot more fluid, and it has a lot more options, from stealth mages planting magic mines, to dual weilding barbarians, to knights, just about anything you can think of is possible.
The environments are mostly improved, but the caves are a huge step backwards. They're more or less straight lines with a few side rooms. You cannot get lost in them, it's literally impossible, because all you do is go forward. The traps don't add much to the experience, as they are not hard to get past. The answer is either on the key or in the room, or in a book lying on the table in that room. As such, exploration, problem solving, and so on are nonexistent in the dungeons. The decline could be easily seen by putting up a map of an Ayleid ruin from Oblivion (http://www.uesp.net/wiki/Oblivion:Wenyandawik) to one from Skyrim (http://www.uesp.net/wiki/Skyrim:Alftand).
As far as the quests, they stink. Nothing you do changes anything in the world. No one likes you more or less, no faction likes or dislikes the others to the point that it hinders you joining. No guard will warn you against drawing a blade as happens in Oblivion, no one comments on quests you've done. Disposition and alignment are simply gone, and I think it makes the experience a lot less interesting. You can join everything, and no one cares. Stormcloak and an Assassin, no problem. Blade and Theif, sure, why not? Imperial Soldier in the Dark Brotherhood, and for that matter, finishing that questline as an Imperial Soldier, ummm I think there's a problem. The factions and alignments of Morrowind were much more enguaging because you had to think about what your actions would do to other factions. If you wanted to be in HOuse redoran, you had to think about which quests you did and why. In Skyrim, that's not the case, it's Seinfeld, it's about nothing, so it doesn't matter what you do.