You know how you know 12 people named Dave, and they live within a much smaller are than all of Skyrim? That's one reason right there that no game should have a plethora of npcs. If they did, 80% of them would have to be ignorant of the player's existent, except to spout off the same small talk, cliche non-discussion phrase that three Dave's ago said. You see this with people all the time. Take a quiet survey when it snows and see how many people tell you that it's 'cold out there'. You can't have a world bustling with thousands unique, dynamic individuals - it doesn't exist. If they tried to do it in a videogame it would lead to millions of complaints of either being unable to find the correct person to speak to, or simply having to do to much of it. OR, complaints about how too many npcs say the same (they already do, and their number is small!)

That said, Skyrim does feel a little lonely at times. I was kind of hoping to see more hunters, bandits, trappers, gatherers out in the wild, somewhat in the vein of Red Dead Redemption.

Indeed, the world's oldest occupation needs more presence. God Wills It!

Sounds just like most pubs in life

I was quite suprised when i slayed a dragon near a town, that when i turned around, all the villagers and guards where standing around me, gawking at my presence, baffled that i just killed a real dragon in front of them. Happened a couple of times. Made me feel like a true hero Been in some crowdy pubs aswell, fistfighting orcs and hitting on hot broads. But yeah, some places are just quiet. Depends on where and when you are there.

I think Skyrim feels much more "alive" than Morrowind or Oblivion, but I can't really put my finger on why. Everyone just seems to have more of a purpose now.

Oh, yeah agreed completely. all 4 songs the bards can sing are great. What? Oh yeah, two of them are almost identical so really it's three and a half bard songs, but hey if you don't like listening to Ragnar the Red sung in an awful tone day in day out, you can join the bards college! I mean, when you join the bards college, then you will be able to sing your own so-..... what? Oh, so you can join a college of bards, a college for the teaching of musical instruments and song, but you can't actually play a musical instrument.... or sing a song. So why can you join the bards college??
At least you can initiate bar brawls eh?! Oh, you can't just initiate them with random a'holes you don't like? They're all scripted events and completely finite? erm...
Well at least you can go into that tavern and get drunk! Huh? Oh, the "alcoholic" drinks don't actually make you seem drunk, they just alter your stats for 60 seconds. That's.....yeah.
Taverns are so well done in this game.

I dont really think its empty, apart from solitude the rest of the cities seem well populated. Only thing is I dont really notice the NPC schedules working apart from stores and a crowded tavern in the evening.

I could stand to see a few more people out and about, both in the settlements and out in the countryside. But not too many though. As a previous poster pointed out the number of NPCs closely correlates with the number of dwellings. I think things like 'market day' would be a good introduction to the series and allow for periods where the number of NPCs far outweighs the number of dwellings.

They do seem to lack variety in behaviour though? I would have thought that that sort of thing could be readily randomly generated and would make for a more organic world.