It's linear but not in a restrictive way. More like Gothic in that there's a storyline to follow and to get to the next major area you have to do certain things. However the areas once you're in them are a good size and fantastically detailed (much more than Oblivions) with lots of side quests and complete freedom. The city actually feels like a city, hell, the towns are bigger than Oblivions cities.
For me it's a good balance of the two. You're not just constantly moving forward killing whatever's put in front of you but at the same time you benefit from the tighter storyline and quests. In a way actuallyit's a lot less linear than Oblivion in that you've greater choice in dialogue response and in how you solve the quests. It also differs in that in one quests I goofed off instead of reacting to the urgency of the task. Unlike OB, where coming back in a couple of days time nothing would have changed, I returned to find a disgruntled Dwarf who told me all hismates were kiled or driven away because I had abandoned them. I irredeemably ****** him off and lost out on his future quests.