Same thing happened to Final Fantasy games at least to me... They keep getting simpler and less imaginative it seems..
I totally agree with you though. Morrowind had more weapon & armor types/more skills/more objects that can be taken and used/and more heart and most importantly the game was almost not in BETA form unlike their newer releases which are. Oblivion had a better engine (so better graphics) and more character creation customization than Morrowind but everything else about it was worse in my opinion. Then there's Skyrim, which has even less of everything than the last 2 predecessors. It has less skills, magic, abilities, objects, object interaction, weapons & armor (I think), potions, working quests. Not to mention worse UI and font than Oblivion with only 2 hotkeys as well.
The only things that make Skyrim better than Oblivion is mesh & texture detail has been improved for the most part and the landscape is more realistic and varied (though even the wilderness has flaws too), and most animations and controls are more fluid and the voice acting is a little better (even though the people that do many different voices should have at least tried to sound different with each person more). Everything else has been dumbed down, made easier, or completely removed all together.
All I can say is, I'm glad they brought Horkers and Torchbugs back. Morrowind's creatures and art design was definitely the most imaginative and "out of this world", where Oblivion & Skyrim are designed to represent a medieval Earth more. I liked the planet Nirn a lot more the way it was imagined before Oblivion.