Reading trough a topic about how people want chat bubbles I hoped to offer another suggestion:

Colours, much like Ultima Online had.

Normally it's difficult to keep track of a conversation, especially in a crowded tavern finding the text of the person you're roleplaying with can be a chore amongst the massive amount of conversation being spammed.

However, if everyone has their own preferred colour and shade of text, it suddenly becomes a lot easier to recognise text from the person you are in conversation with.

In addition to this, the colours also add a bit of personality to your text!

Bright pink comes across as cheerful, feminine. Dark blue has an more manly tone to it.

Also, I'm not stating that this idea is better then chat bubbles, but I believe it to be a viable alternative.

One does not need to exclude the other.