In The Witcher, a game I never finished and had a fair share of gripes about, the unimportant NPCs added more atmosphere than most RPGs to date. It isn't necessarily the same as A.I., just stuff like -
Children playing some kind of skipping game only stepping on certain stones
The homeless huddled around a fire at night, some homeless use typical phrases, one I remember in particular "ah... life
" In an exhausted sounding old homeless man voice.
prosttutes trying to get attention
etc.
I would occasionally find myself stopping just to watch some NPC's idle animations. I wish more games had this. NPCs should not mill about aimlessly and talk about random unrelated subjects.
Now, of course, me being a huge Thief fan, muttering, drunken guards with hilarious dialogue and slow reactions cannot go unmentioned! Also non-combatant characters running in terror, screaming for the guards, etc. etc. NPCs that reacted to dead bodies, light levels, sound, etc. Thief series had probably the best AI of any game I've played, F.E.A.R. is the only notable contender.