I have absolutely no idea why they had to limit stuff to fit it in the space they did on the disk. I mean there are games on xbox with much more space taken up on the disk, so why not add more dialogue, even just more generic dilogue, would take hardly any time. And why not give the PC high res textures? This is getting a bit off topic though, as this has little to do with development time.
Not really off-topic, imo. We're just pondering on wtf they did during development.

To me it just seems blatantly obvious that Skyrim is SEVERELY lacking in dialog and quests. I mean even Fallout 3 had a pathetic amount of quests, but it made up for it by giving each NPC in Rivet City like 5-6 possible random conversations with other nearby NPCs, and the quests involved a decent amount of dialog. Skyrim you can literally walk up to two NPCs who are programmed to be able to converse with each other, they'll do so, you can take a step back, walk up to them again, and they'll repeat THE EXACT SAME CONVERSATION.
I guess somewhere early in development they decided that radiant quests were somehow a fair trade and decent substitute for storyline or quests with substance. Too bad, imo.