The lights are on
I was a huge fan of Morrowind, and when Oblivion was about to come out I was asking myself all these same questions, thinking about the possible improvements, posting things I thought might be subtle ways they could improve a game that, in my mind, was definitely more than, say, 85% of the way up that all-time-greatness scale.
And then Oblivion came out. I was really excited, and I got my limited edition, waited, traded it for a GOTY edition. And overall was very disappointed.
The largest flaw in Oblivion was the leveling system. No matter how well you knew the game (unless you found that one chick with the ebony armor--and that was a glitch), your items and the enemies around you depended on your level. Not ok. No surprises at all. "Oh, what's this new thing? Oh I must have gained a level." There's no way to get good items ahead of time through skill or cunning like there was in Morrowind, but perhaps more importantly, it's not easy enough to walk out into the wilderness and get your a** handed to you. The creatures are not necessarily too easy, but you can always be prepared. In Morrowind, as a level 1 character, you could go get slashed by a Dremora if you wandered into the wrong place. Now THAT's a surprise.
The second thing that was a major flaw in Oblivion was the politics of the guilds and factions. (I'm surprised no one mentioned it here already...) One of the gems of foresight Bethesda had when creating Morrowind was keeping some factions exclusive--you can only join one of the Great Houses, and no take backs or second chances. You can't be master of all the guilds at the same time, because one guild ends up asking you to kill the leaders of another. This means in order to experience all the content of the game, not only do you have to figure out all the secrets and the hiding spots and the tricks, but you also have to play the game multiple times. HAVE to. I played through Morrowind and the expansion packs with more than 10 different characters and each time my experience was distinctly different. I played through Oblivion once (and I have to say I probably never will again), and not only did I start getting to the same encounters over and over again, but I also was able to unlock every Xbox360 achievement for that game with that ONE character. Lame. There was no point at which they made me choose a side, or make any kind of important decision. (Again, the only exception is a glitch--the Daedra statue that, if you talk to it wrong, you can never finish the quest...that's the only irrevocable choice in the game....) I liked some of the plotlines (the Dark Brotherhood especially comes to mind as inventive) but overall I wasn't connected to or invested in the game after a certain point, because I knew I just had to follow directions to continue through the game. I NEVER had to make a choice that mattered in Oblivion.
So that's my suggestion. Yes new weapon and armor systems if people want them. Yes a cool place to be, an interesting, diabolically twisted plot with devious and cunning enemies (and friends). But I think making sure that the player feels like his/her choices MATTER, not just that they effect the world, but that they effect the gameplay. I want them to make me want to play it more than once, at least to see what cool stuff I'm missing out on if I had made choice A in the beginning instead of choice B.