Except the existence of karma makes it possible to be good or evil. Granted it could be implemented better but is still necessary to draw a line between good and evil.
I'm not so sure. Doing the 'good thing' may end up hurting more people in the long run. Let's say you killed a tyrant, but now there's a political vacuum and anarchy, and more people are suffering. Letting him live, despite him being incredibly corrupt and thoroughly despicable, may lead to the community he represents thriving and a lot of lives improving as a result. Which is good or evil there?
I like the absence of a karma system, because it doesn't force someone else's perception of good on you or your character. The game can never accurately judge your intentions. I may be a thoroughly awful human being. But I know that blowing up a town for a small amount of cash isn't going to help my long term prospects, as I could easily be forever known as responsible for deaths of, uh, dozens. But if I disarm the bomb, I'm lauded with praise and my personal opportunities are increased manifold.