One Thing i hate about most MMOs is that the NPCs are reduced to Automats. Hit the Button, grab the Ticket, head off to kill the Mob - hit the Button again, get a Reward that doesn't make Sense.
To me, every little step up the Interaction-Ladder is very welcome. EQ2 for Example has actual Conversations ! Granted, most of the Time you have exactly two Options, where one is "Go on" and the other "Good Bye". Yet sometimes, rarely, you can ask about Specifics, or act either gruff or friendly. Again, granted, it never makes a Difference for the Quest or even further Conversations, but at least it feels more like actual Interaction.
Naturally i'd love MMOs to go beyond that, and allow me to speak with People about Rumors, to get a Bit of Lore, or just to say hello. Not necessarily in a very complex Way, just good oldfashioned Multiplechoicedialog.
Then, i'd think about tieing the Dialog to the Factionsystem, so that NPCs hail you differently if you've done a Lot for the Town, or speak tersely if they don't know you. That would go well with a "personal Faction" you get with that NPC alone - so if you're the Hero of the People, but have always been blunt and stand-offish with the local Tailor, he'll treat you less kindly than the other Townfolk.
Another Step further, it would be great if NPCs would sometimes (rather rarely) Initiate Dialog with you, instead of the other Way around. Asking for Help because you have helped before (offering the Quest, instead of waiting to be talked to), or offering Goods they don't normally sell (rare Drops at hefty Prices) - or just asking if you know News about some remote Place of the World (probably referencing a Quest).
It starts to move from Extrawork for the Devs to real Problems once you try to connect NPC-Reactions with Gameplay. For Example if Shopkeepers that liked you gave you better Prices. Then how do you make it so that not everyone grinds Shopkeeperfaction and is always nice and friendly around them ? After all, you don't want Roleplayers to suffer, because they act out disliking Burians, or having a bad Day...