The stats system. It is too simplified imo. The perks that I like for my characters are often hard to reach, I have to pick a lot of useless ones on the way which doesn't make quite the 'be whoever you want' idiom. There are no birthsigns which is a total let down for me, because those were initial choices that did matter all your life and were great for character customization. I'm not comfortable with a system where there are no lifetime consequences for your initial choices. It makes sense that a person (fictional character) is born with some inherent abilities that can't be changed mid-life(game), and the birthsigns were a tool that served well that sort of notion.
Not to mention that race, class and sign used to provide a way to give you a radically different playthrough from the start.
In Morrowind I saw it as a way to tweak difficulty mainly.
A Dunmer with the Lady as sign would start with resistance to fire 75% and +25 endurance and personality.
This would be an excellent beginner build.
An Altmer with the Atronach as sign would start with resistance to disease 75%, weakness to frost and shock 25%, weakness to fire 50%, weakness to magic 50%, spell absorbtion 50%, no regenerating magicka and a boost to magicka of +350%.
Rather hardcoe.