Tops Oblivion in every way but one.
This game is a phenomenal achievement. Oblivion is my all time favorite RPG, and Fallout is as good or better in almost every way. The graphics are better. The sound is fantastic. I absolutely love the radio stations, both the songs and the DJ's. The voice acting is generally excellent. The VATS combat system is extremely entertaining. Probably a necessary addition to handle guns in Oblivion's engine. The main story is more compelling and personal than Oblivion's. And there are many meaningful moral choices to make.
The only thing that keeps Fallout 3 from surpassing Oblivion is the setting. Not that it doesn't execute on it's post-apocalyptic theme; to the contrary. But it's so well done it's, well depressing. I just don't want to live in this world. All the dark humor fell flat to me because I genuinely felt bad for these people. This doesn't prevent it from being a great game, it is. It's just the difference between a 50 hour game and a 300 hour one. (Yes, I played Oblivion 300 hours.)
The only other quibbles were the oft mentioned inability to play after the main quest, and the fact that my dog ran away right after I got him. (I just told him to get some food and he never came back.)