I've played all of the Elder Scrolls games (Arena, Daggerfall, Morrowind, and now Oblivion), and I truthfully have to say that I think I prefer the complexity of the earlier games (Daggerfall and Morrowind), the immersiveness of the newer games (Morrowind and Oblivion), and the arguably only non-******** user interface -- that of Arena. I hated the UI of Daggerfall, found the UI of Morrowind to be incredibly poorly designed (yet ultimately still usable, as opposed to Daggerfall), and, yet again, find Oblivion to have a horrible UI. I was seriously hoping that it would be an improvement over Morrowind, but no such luck. Bethesda have never designed a good UI for any game, and I think I've played all of their games, going back to Arena!
The graphics are awesome, and you can, in general, stop worrying about whether your computer will run the game or not. I can virtually guarantee you that your computer will run the game, unless your video card is a GeForce 4 Ti or a GeForce MX. Those cards are NOT supported. Just buy an AGP 6600GT and you'll be fine. No need for a new power supply or anything; you only need a new power supply if you buy a 6800.
The 6600GT is not going to be obsolete for a long while. It just came out! My girlfriend has a 6600GT in her system, and it plays everything with maxed out graphics just fine. Stop worrying so much about staying on the cutting edge; no game manufacturer would EVER market a game that didn't play well on the previous generation of video cards. When nVidia gets to the 8000 series, THEN you can start worrying about the 6000 series.
Personally, I have a 6800GS, and it can handle everything that Oblivion throws at me. Part of the reason is because I'm only playing at 1280x1024 -- my LCD monitor is limited to this resolution. With a CRT, maybe I could go higher. I'll have to try this on an old 21" CRT I have.
Overall, I like it, of course; I would distrust anyone who said they disliked an Elder Scrolls game. However, there are serious flaws in the game. The biggest consist of the lack of complexity (perhaps not a flaw to the majority of console gamers), the CTDs (when I have everything maxed out, sometimes the game crashes when entering a new city -- solved by reducing graphics detail), the UI (horrible, horrible, horrible), and the silly mini-games (which are probably not a flaw for the majority of console gamers).
The best parts are the graphics, sound, immersiveness, moderately impressive physics engine, and the somewhat intelligent NPCs.
Don't expect trees to light on fire when you fireball them. Don't expect NPCs to realize you've broken into their locked house. Don't expect corpses to decay into those skeletons you constantly find lying around. In short, the physics is next-gen, but not really all that revolutionary or anything. I guess we have to wait another 10-20 years to get what I want.
Character generation is okay, but people who haven't seen The Sims might be amazed by the facial construction of their PC. It's basically stolen from The Sims, which your girlfriend might have just recently been playing obsessively (token chauvinistic remark).
The plot is typical TES recycled Lovecraft/Tolkien cliches. Forgettable, as usual.
I'd give it an 8/10. Morrowind is better in some respects, but much worse in others. I'd recommend the game to almost anyone, as long as they have a 6600GT or better. A 7800GT/GTX is NOT required, despite what you may have heard.