I'm not even that big of a fan of Gothics, but when playing them for the first time, the thought that came to my mind was "this is how it should be done", although it was probably more about the sum of different parts regarding how the open world is designed, not just the NPCs.
CDPR's approach was changed quite a bit from TW1 to TW3. I thought the former had pretty neat NPC schedules, and Vizima felt like a lively place. TW3, on the other hand, doesn't really even have NPC schedules as far as I know. Named NPCs will stand in the same spot for all eternity unless the plot dictates them to go somewhere else, while generic townspeople effectively stop existing when Geralt is not in the vicinity. What the game has could be more accurately described as "location schedules", meaning that the fish market is going to be densely popluated in the morning, whereas in the middle of the night the stalls are empty and the place is deserted except for maybe a band of cutthroats. Visually it does create a nice impression of a living, densely populated city, but the NPCs don't really feel like actual people, more like robots that are there just for the show.
I like the Bethesda approach in principle, although it's gone through some changes with each TES game. Daggerfall and Morrowind are often criticized for their "wiki dialogue", but I really like being able to talk to generic townspeople and ask them about whatever comes to mind. It helps create the illusion that they're actual people and not just walking props or quest dispensers. The downside with these games, obviously, was how static the game worlds were, with most NPCs never moving from their spots. Oblivion added NPC schedules and tried to make each NPC unique by giving them one or two lines where they told you about themselves or the town, but Bethesda shot themselves in the foot with full voice acting among other things, so you got empty towns where every character felt generic and no one had anything of interest to say, just a couple of lines about latest rumours and maybe an additional one about some quest. Skyrim made a clearer distinction between important and fluff NPCs, meaning that you could no longer talk to everyone but the important characters had more things to say, and the towns felt slightly more alive than before.
Obviously it comes down to what you want to achieve, but I'd like to see someone taking the Daggerfall/Morrowind approach and combining it with well-made NPC schedules.