Most of the enemies (bandits, dragons, etc.) level with you. Some don't however. Giants, mammoths and trolls all seem to be a way higher level than you from the start.
It's not that I want to be a God at level 1, but I don't want to be level 15 and come back to an area that I started out at and have to fight a bunch of NPCs that were level 1 through, say, 3 and are now around level 15 because I am. I would not mind a few of them, but from what my friend told me of Oblivion it was just plain stupid to have every NPC the same level as you. If all the NPCs equal your level then there is very little feeling of advancement.
It's a pretty big mix, i'm level 25 (Just beat the main quest) and i've definitely feel like i'm stronger now than i was- although its nothing compared to Morrowind (for better or worse) Monsters that gave me a pretty big challenge at level 5, die in two strikes. However, a lot of stronger monsters spawn now that negate that feeling of power. It's a mixture between Oblivion and Morrowind.
Ugh! This is what I hate about games. I would hate to buy the game only to find out it is exactly what I feared, and then I would not be able to return. Games have become an expensive hobby now, so I have to watch what I purchase. I guess I will have to pass on this game until I can find someone to talk to about it. Shame because everything else looks to be really awesome.
I want to thank everyone for their replies. I really appreciate it.
P.s. I LOVE how they have done these forums with the picture in the background. Sweeeeet!