Consistency in Characterization
Giving the NPC inhabitants of our worlds personalities, likes, dislikes, and all the other necessary ingredients for them to “live” in the world can tremendously enhance immersion. It can also do more harm than good when we forget to pay attention to consistency. I’ll provide a couple examples to make this clear.
Goblin warriors deep within the enchanted forest have less than impressive intelligence. If one were to demand the shoes off your feet, it might say, “gives me those feetses or makes you mince meatses!” Mean bastard, but at least he can rhyme.
Now suppose there are some more goblin warriors at the other end of the forest, who happened to be populated by another designer. When one of those wants your shoes, it demands, “Hand over your shoes or I shall cut them off your stiffening feet.”
The goblins look the same, are in the same general area, and have the same name, but they act completely differently from one another. If this happens without explanation (for example, the westerling goblin warriors have gained wisdom from an unknown magical source), it is a bad thing.
Another example: Let’s say Jinwarthans, an ancient yet technologically advance race, suffer a deathly allergy to an uncommon metal called Relac. Oddly, on the planet Draelon, Jinwarthans are present in their normal gear despite Draelon’s abnormally high concentration of Relac ore. Looks like one of your designers didn’t read up on the Jinwarthans.
This applies in many situations. The kingsguard should all wear similar outfits. People should have regional dialects. Cultures should have similar tastes in food. A single character shouldn’t switch from sewer cockney to upper-echelon pompous speak. You get the picture.
These examples may seem extreme, but I’ve seen similar cases in many MMOs. It is very important to remain consistent with NPC characterization. Doing so will add great depth and flavor to a game, but doing so halfheartedly can have a great negative impact on suspension of disbelief and immersion (even if it’s a subconscious impact).

I had hoped that you would go a little bit more in-depth with this topic. Why is consistency so important? Who says goblin A has to be as dumb as goblin B and vice versa?
How would one enforce consistency amongst a team of developers?
How big is the impact of lack of consistency really considering most players will in their endless aptitude kill either goblin before it even utters the word ‘give’.
Are there any instances where consistency doesn’t matter?
From a development point of view it’s easy to say there’s a goblin class and all goblins have to be derived from that class with a margin of +-10% in stats but this also results in a predictable loot pattern in most cases (more often than not loot is derived from monster statistics).
Consistency while generally good can result in uniformity which is predictable. Is this bad? Who knows, but I am sure there are few players out there in any MMORPG killing rats… why? because they are quite consistently placed into the game as rather dumb rodents that generally carry nothing of intrest.
Whilst I agree that consistency in general allows for deeper immersion I also think there’s certain risks involved with being overly consistent.
Consistency in Characterization
I think consistency is important to the immersion aspects of the game. I am guilty of whacking the gobbie with a sword or feeding him a fireball before he can utter the first illiterate mumble at times, but at others, especially for quests, I tend to let the scenario play itself out. Simply clicking through text responses to get to the end makes it rather dull. Quests aside, the general ambience is affected by obvious lapses in consistency. This is not to say that all must be boring and uniform, with every Orc grunting the same set of curses in the exact same dialect, or having all High Elves in a town act snooty and aloof. A given population should have a unique ‘culture’ that allows some variation, but where significant divergence is explained in some manner. Most goblins in the Forest of Green Doom will sound similar (NOT exactly alike) but with some variation for variety’s sake, and a goblin that spouts Shakespeare would be explained in some manner, thus making it unique. Is this my quest NPC perhaps? Does he speak with the same accent as the goblins of the Gobblerock Foothills and is the fugitive I am seeking out? Does his quest chatter state that he was ensorcelled by an evil Mage and had his intelligence enhanced?
Consistency in characterization, coupled with the development of unique ‘cultures’ for in-game populations, work together to enhance the gaming experience for those of us who take interest in the immersion aspects. Once that consistency is in place the digressions from the unique regional ‘cultures’ stand out as in-game atmosphere, not merely devs not comparing notes.
That brings up the subject of how do you achieve that in your game production environment. My last experience coding anything similar was in my mudding days many moons ago, so I won’t pretend to have all the answers. I am assuming that game development teams have a culture map or similar to work from and a storyline that maps out how the various parts of the world intersect. Whatever teams call it, there must be some master plan for ensuring continuity, and a QA process that backstops the development teams to ensure they stick to the storyline. Much like a code review serves to ensure quality of programming, a storyline review process will help ensure continuity. Really it comes down to having a vision of what the world will be like, making sure that the development teams are educated regarding that vision, and including this in the QA process. Easily said, more difficult to implement as the scope of the project increases, but in the end well worth it.