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There is no dialogue in Oblivion according to 1UP
Preview - posted by DarkUnderlord on Wed 11 January 2006, 12:00:18Tags: Bethesda Softworks; The Elder Scrolls IV: Oblivion
1UP.com have posted a preview of Oblivion, which I guess means it's closer to coming out soon. However, for all of those who hoped the dialogue in Oblivion was actually going to be better than the wiki system of Morrowind, think again!
We then visited a town, which seemed a little quiet -- not the bustling center of trade we were hoping to see, but the citizens we managed to talk to were quite animated. Each character in Oblivion has a voice and lip-syncing, the idea being to enhance the immersiveness of each encounter; but conversation trees progress, unlike in games like Knights of the Old Republic, without your answer. In each conversation you have a list of topics from which to choose, but your replies and questions aren't written out. This is a design choice held over from Morrowind.
Of all the things they had to bring over from Morrowind, that was the one they could've done without.
Thanks Master Thief!