By this, you don't mean damage output but NPC "knowledge"? LIke being harder to sneak around or using better tactics?
Yes. Like others have said, I've always said the same: increasing damage dealt is the easy way out for the programmers, when it comes to modifying the difficulty level. Many players don't like it. We want them to be smarter!
But if it wasn't so hard to make the AI smarter, they would have done it in the first place.
It is very difficult to make artificial intelligence. The more complex the game, the harder it is.
I remember when I was a kid, I made a tic-tac-toe video game, and had a major breakthrough when I managed to make a computer opponent. As ridiculously simple as the game is, it was hard for me at the time to figure out how to do it.
You know how I made the skill levels? I made the opponent pretty much perfect on the hardest, yet make mistakes on the easier skill levels. I'd rather that was how they did it in Skyrim.