I must say though, I rather liked being able to actually interact with random people. Having them just talk at me with no response option seems less appealing.
I doubt they would have cut it just because of laziness. At first I didn't like the idea either, but I've thought of some possible reasons.
1. It makes Speechcraft mean more, along with the wheel mini-game being gone. I felt it was a problem that I could raise my Speechcraft to 100 by going around telling jokes to the homeless. I'm excited to see how they design the skill in Skyrim, but I can't imagine it making less sense.
2. Once they started using voice actors, there were two options: blow through disc space with enough voice actors to make the NPCs convincing, or create a country of vocal clones. Neither was a good option, but they picked the lesser of two evils.
3. With the emphasis the devs have placed on making cities feel more believable, it would be remiss to have the same kind of dialogue as in Oblivion. NPCs have definite jobs now, and with the increased realism comes increased expectations. Real people would have real lives to talk about. Giving every NPC something meaningful and different to say, even textually, would be incredibly tedious and, personally, I would rather them take that time to focus on something else. Not to mention that since they use voice actors now, all those meaningful things would need to be recorded, and by enough voice actors to not make everyone sound the same. Which would then take up even more disc space, and space spent on voice actors was a complaint of theirs about making Oblivion.
In short, they decided that they couldn't do NPCs in a way they were satisfied with, and cut it down to something more manageable: one-liners.