I think it's because fully-voiced dialogue limited the amount of talking they could put in. If it was all silent, dialogue could be unlimited. Therefore, quests and dialogue trees have no limit.
Actually, there's another BIG limitation on dialog trees and multiple quests: testing it all for conflicts and compatibility. One quest can very easily break another, in many cases. Oblivion tried to seperate the various guilds and factions completely to avoid any interaction between them, which was good from a "testing" standpoint, but made for a very "fragmented" and unrealistic game world. Nothing you did for the one group had any effect on the others, and ultimately, your only real impact on the world was by delivering the Amulet to start the MQ and open up all the Oblivion Gates, and finishing the MQ to close them. Even in the midst of all that, with Merunes Dagon himself bearing down on them, the NPCs on the street would still comment "....it's a Galleon" or "I saw a Mudcrab....".
Having the NPCs recognize the current situation (such as "player character is head of FG" or MG, or TG, or all three, or has completed MQ, or is the "Hero of Wherever-it-is", or that the city is under attack by giant sentient turnips, etc.), with some form of priority or random choice of one situation versus another, and comment accordingly, would involve a whole new level of testing for all of the possible combinations. Voicing all of the individual possibilities would be a daunting task, but coding the convoluted mess would be a second hurdle which would NOT be solved by going to a "text only" dialog system.
Probably the best we can hope for as a compromise is: all major plots and standard greetings fully voiced, with more detailed or heavily branched conversations not related to the major quests being only partially voiced, with text to supplement them. Minor plots could start out with a voiced intro, and then use either voiced or text-only dialog as needed. Some interaction between factions would be highly welcome, but the realities of the situation are such that it would probably need to be somewhat limited.