Well, the original Fallout and Fallout 2 had some really good dialogue trees. If you acted snarky to someone, they responded in kind, and if you were a complete dick, they'd stop talking to you.
With Fallout 3 (And Morrowind, and Oblivion, but I'm trying to keep in a franchise) comes the problem of having interactive dialogue in a game with voice acting up the wazoo, in as much as you have to have more spoken word data bloating the game since thanks to prettier graphics, people have stopped enjoying the world of text and reading and now are forced to needing pictures on their McD's cash register to perform their job properly. I'm getting tangential, but, were, say, Fallout 3 as lushly fleshed out as say, Fallout 2, the game would have had to be shipped on 4 Blu-Rays and require the server base of the U.S.S. Ronald Reagan to operate (Both hyperbole, but makes a point).
So, in the end, as things get more and more powerful, things like story are going to have to be put to the wayside. Due to the amount of money, dataspace, and continued sloth of the modern area, if we're to have plot, it'll be shoved off to one side, more and more made into little cut scenes between times where you simply run around making huge piles of dead bodies. We've come back to about where Nintendo was pre Dragon Quest 1, where even if we were blessed with a plot, it'd pop up between levels with a picture and some text. The picture and text have been replaced with people talking and some expensive models staring lifeless at one another, but that loses that whole, "I'm mattering!" sensation so few games managed to get out, and now probably will never.