I think that it's not the amount of NPCs, but the quality of NPC setup and schedule that matters.
D:OS can sort of get away with this if they are not going to a hugh city like what other games did.
In Oblivion I just kinda lost, I have the impulse to talk to everyone and get all information I could, but to track down everyone is a annoying task, they just move around too much. It take such a long time to get those info(sometimes useless), if you stick to the gun and go for main quests only, it feels like you cut away a hugh part of the game.
To me, those collect X items quest is really boring time filler, so a tightly structured area with careful planning of evens are more important than have 5000 side quests which are 95% identical with way points.(By the time I reach 1st major fight in Oblivion, it was too easy because of all the side quest exp buff.)
so, yeah, my 2 cents.
