Overall I prefer Morrowind, but it is limited by its older engine and the choice to not include fast-travel (which some actually do like... there are a lot of alternate options for travelling that are more sensible within the canon). In terms of atmosphere it rocked Oblivion's butt royally though.
Atmosphere definitely, but that's about it for me in terms of Morrowind being better, well and the horrible gear scaling in Oblivion.
Morrowind is about twice as big as Oblivion though. There are 199 quests in Oblivion, Morrowind has 376 without expansions. Plus it doesn't have these pesky Oblivion gates that pop up while you're doing something else. I really hated that about Oblivion. There were 60 of them and they were all basically the same.
More is only good if it's paced properly. The pacing of Morrowind is like needing to travel across the country but having a broken leg with no crutch.
Good game, worth playing if you haven't, just not the best TES game for me.