Before Skyrim came out, I remembered playing Oblivion and decided that it would be kinda cool if they stopped freezing time while the player was in the menu system. If you wanna read a book, or drink a potion, or what have you, you have to remember time won't freeze while you're doing so. One obvious benefit is that it can preserve the challenge of battles - no guzzling potions in the middle of a fight, right? It could also make Restoration magic somewhat valuable, since you can simply equip a healing spell with a hotkey or something similar and heal yourself quickly in the lull of a battle where it might not be practical (or plausible) to say "Hey, wait a sec" then dig around in your rucksack to find like four healing potions to drink.
Also, it might aid immersion for those whose sense of immersion is a little more easily broken. If you're on some quest that you find through a book (I can think of at least two offhand) and you wanna stop for a second in the wilderness to re-read that book you're carrying in your pack to check your progress, or if you're using one of the treasure maps and want to re-check the map, you'd better make sure you weren't in bandit country, and check to see that there isn't a bear or pack of wolves on the horizon, or you might get jumped while your nose is in the book. Apply a damage multiplier to attacks on the player if they've got their attention concentrated on reading.
Also, this would apply to all kinds of activities. Time doesn't freeze while you're mining ore, right? Do it in a mine full of bandits, and the noise can draw them out, and you can easily get jumped while you've got a crappy weapon (a pick axe) in hand and your back turned. The same applies to smithing and improving weapons and armor, and I think it works the same for enchanting and alchemy - time continues to pass as you perform these activities. So why not make pickpocketing and lockpicking work the same way? If a guard walks by periodically, you'd better be good at lockpicking to get through that master lock quickly before he walks by again and sees you obviously committing a crime. If you're trying to pick the pocket of a mark who's walking along, you'd have to use the stick to keep sneaking behind them, while trying to fiddle in their pocket without getting caught.
This would also make people think more carefully about the things they do in terms of carrying several of the same item, with varying enchantments for different purposes. It's reasonable to pause before an imminent battle to take off your ring of sneaking +20% to slip on a ring of heavy armor +30% before the fight, but stopping time to take off your robes of sneaking and boots of sneaking and gloves of sneaking and hood of sneaking to slip into a full suit of heavy armor? No, that's patently silly, and it would make it so that playing the game is rewarded, rather than playing the game system.
This could be harder on people using the console-style hotkeys - console players plus PC players like me who use a 360 controller - but everything has its downsides. And PC players have the use of eight hotkeys, making it fairly easy to be able to do some reasonable things without freezing time - swapping out their bow for a greatsword, or something similar.