Not as good as Morrowind. Contains Spoilers
The opening sequence was great, particularly the trick with the four turning into Oblivion. But sadly it was downhill from then on. The game starts off in a very immersive way; you are released from prison by following the current Emperor on his way to be assassinated. After witnessing his assassination, and leaving with a mission you have no choice but to accept, you are put out into the world to travel to your destination, but not before picking your character class. This is the point where the game starts to turn.
On the downside:
The choice of skills has been heavily dumbed down, and the leveling up simplified unnecessarily. Many of the armour and weapon classes are gone, and there are only two levels of contribution to overall level progression. As I would find out later in the game, you can only train 5 times per level making the bonus trick of the last game much harder (The x5 x5 x1 on two skills and luck)
The voice acting has been increased, and by the sounds of it, the same voice actors have been used that were in Morrowind, but the increase in speech has meant that they have less to say. Everything is spoken, and it gets very repetitive.
You can zip to places that you have found on your map, and all major cities are accessible right from the start. Although this is quite useful, it removes any kind of incentive to go exploring on your own. Anything you hear about gets marked on there, and is very easy to get to. The methods of transportation have been removed too, you can walk or ride a horse, but there are no magnificent silt-striders, and no boats.
Sleeping, thievery and magic have suffered greatly: Now you can wait and replenish all your stats, and stamina goes up even when you run, making the game far too easy. Everything you steal is marked now, and can only be sold through a fence which I feel is totally unrealistic. If no one saw you do it, how would they know it was stolen? After several hours I found out that magic has been demoted to a support skill, and it is basically impossible to be a powerful magic user. Enchantments have been castrated, both in power and number, and the whole soul trapping element has been rendered pointless. Teleportation has been entirely removed from this game, as has flying, which I think was a shame as these were my two favourite spells.
Despite all the shortcoming of this game, there were a few improvements:
The scenery is beautiful, and the plants and water look much more realistic. One criticism of Morrowind was that it was very brown, but this could not be said of Oblivion. Even so, the scenery is not as diverse as in Morrowind. The towns all look very similar, and are far too underpopulated.
A lot of the animals have changed too, which I guess you would have expected from a new location. They got rid of the cliff racers, which were the bane of many people's life in Morrowind, but mudcrabs and rats are there to replace them
The character screen is different, but the tabbed navigation is a good move for a console. The journal and map have improved, and are much easier to use than the original Morrowind (Without the Tribunal updates)
Morrowind was by no means a perfect game, it was very hard to keep track of what you had done, and the map wasn't great at marking down points of interest. However, his had been almost completely fixed by Tribunal, so the only points I felt were an improvement in Oblivion were made redundant by an add-on that was a lot older than it. Unless you need brilliant hi res graphics, there is very little, aside from a new story, for me to recommend, as everything that made Morrowind an interesting and believable place has been taken away in favour of simplification. Even the horse riding is shallow, and feels restricted in such as large open space. Overall I don't feel it was a bad game, but one which will forever be in the shadow of it's predecessor.