Skyrim is a great game, I'm not arguing that, but a lot of its "innovation" came at a great cost; depth. In the attempt to get away from "spreadsheets" a lot of the series depth was lost, while you don't have things like http://www.uesp.net/wiki/Morrowind:Factions#Reaction_Table, you also don't have the interaction and experience that it provided. You no longer have to keep track of how each faction interacts with the others but at the same time it takes away from the tension and feeling that came with those interactions. One example is if you are the Arch-Mage of the College of Winterhold and you talk to the Jarl; almost everyone in Winterhold goes on about how they distrust the College and its Mages but when the PC talks to them it doesn't matter. Another example is the interactions within a faction; if you side with the Imperials, an organized and disciplined army, you can run around in what ever armor you want even though according to their strict rules you should be wearing your Legion armor. In Morrowind, if you weren't wearing your uniform the Legion wouldn't so much as talk to you. This was a good thing. Another thing that got taken away was requirements to advance within a faction. Now while it can be argued that requirements just forced the player to grind, it takes away from the sense of accomplishment that came from moving up the ranks and didn't allow for completely ridiculous scenarios like becoming the Arch-Mage with out having a single skill in Magic above 25 >.> I can accept the loss of Spell making, in depth Enchanting, a few useful spells (Night Eye, Open, Levitate, Mark/Recall, Cure Disease, Cure Poison, Reflect, Dispel, Blind, Jump, good Destruction spells...) and some verity in weapons, but the loss of any meaningful interactions completely kills (for me) the whole experience, and don't get me started on immortal NPCs. It's too late for any changes to be made for Skyrim (on anything other than PC) but hopefully when TES: VI roles around we could get just a little bit more spreadsheet. Until then it's back to Morrowind for RPGs and Skyrim for Action (really good action). You can ignore me I just felt the need to vent.

wall o' text! AHHH!

I'll read it. G_G

Wait: This link is about morrowind?! :S

Yes, the link is about Morrowind. It is one of the spreadsheets that Bethesda was trying to get away from.

although slightly of genre, I think New Vegas got the factions spot on, i was quite disapointed at how threadbare the faction interaction is

I think the main reason they abandone this kind of system falls into development time/testing needed to make it work.
But yes if it actually works, it makes a game with much more substance, and yes New vegas is the "midle term", a simplification of the faction system taht "works",even tough i could enter NCR areas without being atacked on sight, even tough I had maxed negative reputation and vice versa.

New Vegas did do a good job with factions, I had some minor issues with it but then I had minor issues with Morrowind's too. I don't expect a perfect faction interaction system though.

Edit: My biggest problem with NV was that the shifts in level of like/dislike were too drastic and the interaction boiled down to friendly or shoot on sight with little middle ground.