First off: Oblivion Mod Manager, Unofficial Oblivion Patch, Oblivion Script Extender, Wrye Bash and BOSS. Important to have when using mods.
Other "essentials": Toggleable Quantity Prompt, DarNified UI, Harvest Flora, COBL (Common Oblivion), and most of TheNiceOne's mods.
Other mods you might want to check out: Race Balancing Project, Deadly Reflex, LAME (Less Annoying Magic Experience) and Oscuro's Oblivion Overhaul (or FCOM, which is a compilation of several overhauls... but FCOM is a pain to install).
There are also a lot of body replacers out there that you may want to check out if you're not satisfied with the default Oblivion ones.
Edit: Also want to recommend companion Vilja. If you want a companion that's probably the best companion mod there is out there.