I much rather have a few NPC's that you can have conversations with, than tons of NPC's that are there just to fill the town up.
I'd say that I would very much prefer to have a bunch of conversation-friendly NPC's, but also a number of "filler" NPC's as well. In reality, I really don't walk around, talking to everyone I see anyway, so why would I do that in a game? Especially in the Fallout world, people would probably be far less likely to engage in conversation with strangers.
And I think Oblivion is a fine example as to why there's no need to talk to every NPC you see, as they all - when it comes down to it - are nothing but filler NPC's that you can talk to for no reason, just to hear the same lame "rumours" over and over again. I'd rather skip the whole conversation screen, just like in FO3, and have them say just one line. Kinda like "Looking for supplies? Check out Craterside Supply". That's more informative than what most people in Oblivion had to say, and yet you didn't need to enter that unnatural, time-warping conversation screen.
And a city simply doesn't feel like a city if there are but 6 people in the streets.