In the past server experimented with bigger amount of NPC and also with more stronger like caps and such. But it appeared it brings more harm than good because it kills player interaction. It is quite hard to roleplay when there are constantly NPCs (especially the strong ones) trying to kill you. That´s the reason why over time it was tonned down again.
Edit: Also, strong/huge numbers of NPCs are harmful to PvP because they can easily destroy it (like when you have snub fight and suddenly NPC battleship appear on the scene).
