Morrowind. The story is better, the side-quests are better, the world is more detailed and the characters more interesting. The only downside it the graphics. It's uglier to start out with, but there are a ton of graphics-upgrade mods that make it look good even for a modern game.
No, I can't say that picking mushrooms in the Bitter Coast was better than any quests in Oblivion.
And actually, Morrowind's NPCs were about as generic as Oblivion's, if not more so, that's why the Less Generic NPC mods were made, after all.
And I could say that you neglected to note a number of strength and weaknesses BOTH games have,
I'd recommend both games, though, both games are pretty good, and both have their strengths and weaknesses, but you've already played Oblivion, so I'd suggest you try Morrowind and decide which one you want to play yourself once you've played both. Just remember that Morrowind is older than Oblivion, and naturally, the graphics look a lot worse, if you get the PC version, there are a lot of graphics mods you can download to make it look better, and you can also get Morrowind Graphics Extender, which can really make Morrowind look a lot better than it originally did, but it still won't look the same as Oblivion, and although some of the shaders that you can use with MGE are things that modders don't seem to have been able to do with Oblivion yet, I'd still say that as a whole, Oblivion looks better in most areas, Morrowind can also take a bit more time to get into than Oblivion, the game doesn't have a quest compass or anything of the sort, so you'll have to pay attention to the directions that NPCs give, but contrary to what some might lead you to think, it isn't going to leave you helpless and without anything to go on, you also start out quite vulnerable, while Morrowind does make use of leveled lists for some enemies and loot, it's not nearly as scaled as Oblivion is, at low levels, if you're not careful, you might still encounter enemies well beyond your abilities, but if you let your skills improve, you'll be able to tell that your character is getting stronger, so you'll need to be willing to spend some time to really get into it, but as I said, it's not going to leave you helpless and without direction, so don't be too quick to give up if you're having trouble finding a quest target, if you're lost, you can always try reviewing your journal, or talking to people, Morroind's NPCs have a lot to say, and while if you listen to what they say, you'll quickly realize that their dialog is all pretty generic, it can also be fairly helpful, especially for players who are new to the game, NPCs can often give you information like where the services are, where the guilds are, and little pieces of advice that may help you survive in the game, and sometimes discussing latest rumors with people can lead you in the direction of quests.
The only problem I found with Morrowind was not being able to fast travel to places I've found, it takes a while to get from point A to point B sometimes
Some players seem to feel this is a good thing, but I'd have to agree, it can be rather annoying, fortunately, the game does have travel services to MOST towns and cities, it doesn't bother me so much that the game doesn't let you travel to dungeons and such, but that there are a few settlements which you're likely to visit many times during a single playthrough, yet don't have any travel services, another thing that can be annoying about the game's travel system is that you often need to keep going between various destinations to find the character who can take you to where you want to go, as each NPC generally has only four destinations on the list of places you can travel to at most, the game also has a few teleportation spells which can help you get back to a town quickly after exploring a dungeon, mark and recall can even be used to allow you to quickly return to remote locations where you recieved a quest, if you place a mark there.