My favourite "extra NPCs" mod for Oblivion was Modem's City Life which added a bunch of new characters who you'd often find roaming the wilds; including an insane Brienne-like woman called Gertrude who'd track you down once a week just to help out with random stuff before buggering off again. It also added a bunch of kids which may or may not be to everyone's taste, but for me it was a nice addition. They're just scripted to chase each other around during the day and their one line of dialogue is "sorry, but I mustn't speak to strangers"!
I got a bit carried away doing the AI in my own mod in an attempt to make my characters interesting, which they weren't especially as they had no extra dialogue. But it was much too ambitious and as a result never saw the light of day.
