Oblivion is a decent game, with a very flawed levelling system. I'd recommend Fallout 3 way before that one.
They don't have too many RPGs so far though. Valkyrie Chronicles is a great one, it has some RPG/Strategy elements to it. Eternal Sonata is a very linear RPG, yet has a nice combat system to it.
I've heard good things about Folklore, but haven't tried it out.
Coming this fall, DRAGON AGE: ORIGINS is going to be a much needed RPG on the system, even though it is coming out on the 360 and PC as well. It's made by Bioware and reminds me of a cross between Baldur's Gate and Knights of the Old Republic. Watch out for that one in November.
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