In oblivion I think I got enough ugly for a lifetime!
This.
I am far, far more worried that characters won't be pretty enough, as opposed to ugly enough. It's a promotional screenshot -- that Nord woman might be the prettiest the engine is capable of. This wouldn't be horrible, but I remember fighting with the Oblivion sliders.
And this. Seriously, from previous TES games, you could argue that the lore says that everyone in Tamriel has hideous, misshapen proto-human features. And back it up with pics of any vanilla NPC. They do great design of worlds, but the faces always have the appearance of being designed by alien archeologists making wild guesses from fossil records.
Ideally, I'd like to see actual character in humanoid faces as well as occasional beauty, but there's no doubt that fugly will be in, probably in abundance. Going overboard on beauty would be a refreshing change of pace as far as I'm concerned. (Though I'd prefer a realistic balance.)