There is some discussion as to just how important fully fleshed-out NPCs are in any given RPG, but it's general consensus that the the more "real" a NPC feels, the more fun players will have interacting with him in-character. Gamemasters should remember that just like a player-character has hopes, dreams, and goals, so does every NPC, and player-characters getting in the way of them could lead to unfortunate encounters.
There is also debate about how much work a gamemaster should put into a NPC regarding game statistics - some people prefer to have every NPC completely defined, with stats, skills, and gear, while others define only what's necessary and fill in the blanks as they go along. This is often the approach with gamemasters who GM "on the fly".