For me personally, whatever the reason U7 was just sort of the pinnacle of an RPG. As with all good things, someone usually comes along and messes it up sooner or later and that someone was EA.
Ironically, the RPG I've enjoyed most in recent years is Dragon Age Origins and guess what? EA strikes again. *sigh*
I liked the Elder Scrolls games and I think they do a great job of world simulation on the macro level providing beautiful or strange worlds to wander around in, but on the micro level they are pretty bad at characterization and dialog and their npcs have about as much personality as a cardboard cutout.
I've never played U7. Attempted to recently but that weird top down view was distracting. Plus I couldn't get it to run properly on my machine. For me though, the pinnacle of RPGs is Baldur's Gate 2.
It's not perfect but it's as close to perfection for me, having a nice balance of tough combat, interesting quests, decent writing, a huge world, lots of NPCs with optional quests, beautiful graphics and music. I also have a fondness for Wizardry 8, Fallout and Planescape:T.
And as much as I love Morrowind, I have to agree with you - it requires you invest a lot of your own imagination and fall in love with the world in general, to really enjoy it since gameplay wise it's nothing special and the characters are a bit dry. Oblivion improved on the gameplay but still dropped the ball with writing/characters.
I think the last RPG I really enjoyed was also Dragon Age. And even then it was just "ok". Before that? The Mask Of The Betrayer expansion which was already some years ago. None of the games I've played the last 7 years or so have excited me at all. I did miss a couple though, The Witcher and Divine Divinity 2 among them. And didn't play Gothic 3 due to the reviews.
But it's the same with JRPGs - the last games I really enjoyed were Persona 4, Rogue Galaxy and FF XII and all those games are at least 3 to 4 years old. FF XIII was an abomination and sort of reflects what's happend with western RPGs - it's pretty but very shallow - catered to what seems like kids with short attention spans.
Thank the gods for the DS!!!