So what are your ideas for making our interactions with NPCs better, and for what to do to make the NPCs worth interacting with once you know the city...
The system I had in a mind for conversation would switch the flavorless wikipedia-style or limiting "pick one of 3-5 lines" style with something that more resembles actual conversation. As it is NPC's don't exist for much more than having the player walk up to complete strangers and ask about "rumors." Personally, I have never seen anyone do that, ever. All RPG protagonists are creepy weirdos apparently.
I'll start off with a (very) basic http://img.photobucket.com/albums/v200/Rhekarid/speech2.jpg so I can describe with points. Try not to be too blown away by my artistic talent. On your right you have a list of keywords, but you don't simply click one and get the robot response. The +, ?, ! above the list are for how you're talking. The first is Expression, which would give you a list of greetings, farewells, and basic wow/that svcks reactions to things the NPC says. Instead of a cheesy game show wheel this is where much of your speech skills would be invested for changing the NPC's opinion of you. An effective, or terrible, first impression would have a large impact on this. Higher skills would allow for more options and improve general bonus/penalty ratios, but it would be up to the player to make the right choices based on the person they're talking to. They might eavesdrop on conversation to overhear what greetings are appropriate in the local culture, or ask about someone and learn that they dislike constantly happy people, and tone down the sunshine without jumping into insult territory. Skillful use of expressions would keep a conversation going longer and put you on an NPC's friendly side.
The ? is to ask about a selected keyword. You could ask about most anything here, and once you select one, a list of options appears in the left screen for either specific questions or general info, which would be added to as the character themself becomes more aware of the subject, starting with basic "what is ____", and eventually getting where is, how to fight, who's in, etcetera. You would still always be able to ask about basic info. The left screen, aside from showing the dialogue going on, is also where the player would get direct responses to things the NPC said, usually in answer to a question or other lines that might be too specific for the system. You could answer with those lines OR change the subject, but doing so could easily annoy the NPC. As long as the character has somehow come in contact with the concept you would probably have a keyword, or be able to type it in for specific "Ask About" option like you see in the original Fallout. There would also be a button to open the full keyword list (the black square in the picture), from which you could find and click one, or drag them between the full list and the dialogue options to reduce clutter by keeping only your most commonly used or currently urgent words in the list. The full keyword list would allow you to ask about more specific things by having lists of NPC names you know, or item/creature types, without clogging common dialogue with options.
The ! option generally gives the same list, but is an alternate tone that lets you be the one telling the NPC about something. Probably as a section of the journal, I'd like to see a "database" option in the game, as has been popping up lately, though preferably without much of it being voice-acted like in Mass Effect, which seems like a relatively pointless use of space and effort. It would resemble the full keyword list, but would instead show the general compiled information your character has on a subject. Bringing up a subject in ! form (obviously the game would not call it this, just a basic example) would, like asking about it, give you a list of specifics on the left, but this time it's you telling the NPC about it, with the list depending on what you know. Aside from disposition, this could also affect NPC behavior; telling an adventurer about an untouched ruin, or a guard that you discovered an NPC is doing something illegal, and watching things unfold. It could also potentially create rumors, telling someone something bad about a person, having it spread through town, and coming back later to see that guy being shunned. Plus, it would allow the player to be asked questions from time to time and decide what info they feel like divulging, if they have any.
Above those options are Bribe, Threaten, and Praise. Instead of direct attempts to modify disposition, these would be tones you could select/deselect in order to influence what you're saying. In normal tone, you might ask someone what they know about the Dark Brotherhood. With Threaten active, you "ask" them while shaking them and yelling, or use Bribe to pass some coins while telling them to keep quiet to others about a particular subject, instead of having a blanket effect over all opinion and responses (though of course, someone you threaten constantly is still not going to like you as a whole). They could also be paired with expressions, such as Praise + positive expressions to fill the conversation with jokes that make the person like you.
Instead of one disposition meter, there would be both Opinion and Influence. Opinion is how much they like you in general, while Influence is how much power you have over them. Someone who hates you might still be quick to do whatever you say out of fear, while a stoic and loyal guard won't budge despite how good you are at social manipulation. That last option, the arrow, is the Request option. This gives you a list of direct commands (go here, do this, follow me, eat that squirrel). Whether they do it would be a factor of mostly Influence, against how much the command conflicts with their own wishes. A lot of variety here could be created by combining an "If/Then" command system (recently seen in Dragon Age, but in other games too) with the keyword list, allowing options like "Go To *select known location* at Time." The average person has no reason to do anything you ask, especially if it's unreasonable, but a clever player could use even subtle ones to their benefit. Say that talking to someone reduces an NPC's range of awareness; a group of thieves could make a plan together where one with high speech skills goes to talk to a guard at a specific time, distracting him while the others sneak by. Imagine formulating the plan, setting it with one guy where Command 1 is to unlock a door at a certain time, and then Command 2 starts with "If 1 = done, then Use Item Birdcall." You wait in the bushes for the sound, and know that if you don't hear it, it's time to rethink the plan on the spot. The Request tab would also allow meaner characters things like slaves, giving commands to people you've forced influence over. You could raid a village with your skeleton warriors and kidnap the people to toil in the gem mine beneath your lair.
As for the NPC's themselves, randomization is much better than it used to be. It would be entirely possible to generate NPC's with as much as or more personality than the hand-made ones in Morrowind and Oblivion. Using the above dialogue system, you could generate a person with pre-set opinions toward various factions and subjects, and how easily they're affected by different dialogue options. Someone who hates the Fighter's Guild might get angry if you bring them up, especially positively, but might like you more if you also talk about how much they svck. An NPC might know something secret, like a worker who helped build a castle knowing about its secret passages, but will only tell with high Opinion
and Influence Using speech skills effectively on people would require an actual effort to get to know them and react accordingly, instead of spinning the wheel for popularity and then never speaking to them again. As well, you might talk to another NPC, use the Ask tab, and select a name from the keyword list. If they know that person, they might tell you about them, which would basically be revealing some of the factors they were generated with. You could learn that someone is relatively timid and start the conversation with them using a threatening tone, gaining yourself more influence with that one-time first impression than you would have gotten with a normal approach. If you fumble into conversation, you might permanently ruin relations with that individual. As with any other skill, getting high ranges of opinion and influence should be much slower and much harder than it currently is; an incompetent locksmith can't just poke at the royal vault over and over until it opens, and a poor speaker shouldn't be able to recycle the same efforts over and over and "stack" opinion gains until this complete stranger loves you more than anything.
What you're forgetting is that the standard game is without any of the optional effects. When we suggest optional aspects such as hunger, thirst, etc, they are to make the game harder. Without them, the game would be of a normal difficulty.
For example, you may feel Morrowind/Oblivion are of a standard difficulty without any of the realism mods, but with the eating, sleeping, drinking, or whatever mods, it will make the game harder. If you don't want the game to be harder, don't use these mods. It's the same for optional settings.
I also doubt the difficulty slider is going, most of us love the ability to make the game harder when needed. I'm pretty sure there's a majority.
I wasn't suggesting removing the difficulty slider (not sure where that came from), or that we shouldn't have options, nor was I really specifically talking to any one person or about any one option. The point was that I'd seen lots of these suggestions pile up, "add blank and make it optional," and it's not that easy. For one thing, it affects how deeply it can be involved in the game. Say the Fighters Guild were optional, for some weird reason. You could turn it off, and the buildings, members, and any mentions of it would vanish. If that faction were superficial, it wouldn't be so hard. If they were tied into politics, competed with other groups, actively controlled monster populations, and so on, you'd either have to expend a lot of effort modifying the game to run without them, or ignore that and have it result in an ugly mess that affects far more than the Fighters Guild option. Or, just put little effort into the faction so it doesn't change anything.
While that's obviously an unrealistic example, the same point applies to other game features. If you have an in-depth hunger/thirst/fatigue system, it can greatly influence the difficulty of certain areas, how hard it is to travel, whether NPC's will go somewhere, how much inventory space you need. TES tends to have pretty generous inventory capacity, but what if that became more realistic alongside those food needs, along with faster, deadlier combat? Switching off thirst can have some considerable side effects if instead of ten water bottles you're carrying ten health potions. Plus you're still having to design the game to work with both options, alongside the direct amount of effort just to create the option. I'm all for making options for things that really are easy to conveniently switch on/off, but for other things, I'd rather they took the one approach and focus on doing that well. When "make it optional" starts to pile up too many options, it ends up asking for a great deal of effort to be spent on watered-down, half-assed "features" that aren't much fun for anybody.