Generative AI is a statistical model, not something that can understand what makes a good plot…
I think ai will be good to make NPC more lively. Having stupid boring quests, and boring dialogue is still a game changer for immersion, if you are able to hold a conversation for 10 min with any NPC in the game. Of course this does not concern main quests etc.
Generative “AI” is not “AI”, it’s a overlarge statistical model of written language. It cannot make NPC dialogue more lively because it has no concept of “liveliness” or “boredom”. A 10-minute conversation is impossible, anything more than a few words and the models very rapidly lose consistency. You can see this for yourself by playing one of the many “AI Dungeon” attempts at using large language models to run a text adventure.