Characterisation or Story?

There's been a growing trend in RPGs to tend towards stronger NPCs. No, I don't mean physical strength, I mean in terms of the depth and complexity of their character. By making the characters that the player interacts with more compelling and interesting, the aim is to draw the player in more. However, given that there are a limited amount of resources when creating a game, where should the line be drawn in terms of developing a character?

I will note that this isn't a problem exclusive to RPGs. Any plot driven story needs to balance the development of its characters with the development of plot itself. However, I think I'd argue that RPGs tend to be more gripping when they revolve around the plot.

This is because the RPG is the player's story. It is the player's choices and decisions that cause events to happen. If their actions don't have the most important effects, then the player is relegated to the position of a supporting cast member in the show in which they are supposed to be the star. This was a major problem I had with the original Neverwinter Nights. So much of the story ended up revolving around Aribeth instead of the player that I felt like a secondary figure to her protagonist role.

It should be very rare that the player does not feel like the star of the game. Even in the climax of Oblivion's main plot, where the player is not the ultimate hero, they are thanked profusely and made to feel like they indeed the saviour that made the success possible. Which is true, of course, but players need to be reminded of that.  Gamers play RPGs to be the hero (or the villain!) and want to feel that they are doing that. The problem with strong characterisation is that it can potentially take away that feeling.

So given that point, it follows that we cannot risk the plot itself in favour of characterisation. This is not only in order to make the player feel like the protagonist of the story, but also to ensure that we give the player enough time to experience a suitably epic story.  As I said, there's a limited amount of resources when making a game, so making sure the player gets a gripping story should be among the foremost of concerns. As much as people say the "saving the world" cliche gets old... it really doesn't. We've been doing it for years now in games of all genres, and gamers still love it. Regardless of the spin of a story, there has to be something at stake for the player to be invested to succeed in the story.  What higher stakes are there than the nation... the world... the universe?

Now just to do an about-face, I'm going to say that characterisation is also an excellent way to get players invested in a story.  If we care about the people involved, we're going to want to see good things happen to them, or if we're given reason to hate them, bad things!  Could we have a game based entirely around a set of characters and their fates based upon the decisions of the player? Would it be memorable, or simply forgotten because it lacked the epic scope of its story-driven competition?