It's endless, really. Basically, I like the way it is laid out now. Which is:
1- We separate first of all the quests themselves, which more or less are just linked to what the player has to do; for instance a "give item" quest will need special lua code to handle the NPC interactions, and so forth. This is clear, and makes good sense.
2- Secondly, we create "problems" throughout the galaxy. These are basically at different scopes, the lowest being NPC level. So an NPC can have a problem, for instance they may need an item from you. The problems then generate the appropriate quests.
3- Last we have a reward system. This is what you get for doing the quest, and right now it's random/pointless (if you bring me a nailgun, I'll give you a resume! Woo...)
This double-way of laying out the quests makes a ton of sense, so it doesn't really need to be redesigned per se. The problems sort of define the high level meaning behind the quest (I'm being possessed by a demon! My child is unruly! whatever...) and we can get away with only a few 1- types, to handle what the player has to do. Bottom line is: I like it.
The problem is I think that it's a bit too abstract. I have the problem system (2) just a little bit too "loose". I need to set it up some way, I think, that I can just sketch out ideas quite easily, ideally only having to touch .info files. These ideas will incorporate the phrase engine, which will let me give a bit of variety to things, so the player won't always know that they are actually solving the same problem.
The other problem is the reward system. On the surface it seems logical enough, but the problem is that it doesn't really tie the quest system into the rest of the game. That is, the player never has a reason to complete a quest other than the reward. So actually, maybe a bit surprisingly, I'm going to nix the reward system completely. Instead, when you complete a quest, you will just gain a lot of friendly points with the person and anyone close to them. So the idea is, I guess, quests are a great way to gain friends. Right now any person will offer their services free of charge, but that is going to change so that it depends on if they like you or not. This ties in, makes the quest system much more a part of the organic whole.
The quest system is, ultimately, very important. If I could just ditch it entirely, I would, but I really can't. It gives real character to the game (this town is infested with zombies! i want my child admitted into a music school, but we don't have the money! and so on) and is sort of like, a way to really break up the game and to motivate the player. Without the quest system, it would sort of be like if in Ultima 6 you could still do everything in terms of gameplay, but the people didn't ever need anything from you. Just way, way less compelling.
So there we have it: 1- keep the quest system per se, 2- rework the problem system, trying to simplify it and make it better game-designer interface and less abstract, and 3- nix the reward system entirely.