Fearless Leader said:
In Ashbury, we have encouraged all NPCs to create a recurring town character ("I'm Billibob the Farmer!") that they can play whenever they want to go to the tavern for a snack or something, and also for hooks. It adds quite a nice feeling to the game atmosphere... I assume and hope other chapters are doing the same thing!
I believe this works best when taken on from the plot side of things, rather than created out of thin air (not saying that's what you're doing, just commenting). I believe that in order to integrate the NPC-character into the world in a meaningful, supported, and consistent way, it needs to be written into the world, rather than necessarily created by the NPC.
Something we did when we started the Landfall campaign was work hard on creating as many recurring NPCs as possible. We have a pretty static number of farmers in the community, a certain number of soldiers available to the town's head noble, and a few oddball characters like merchants and the like. When our plot team meets, we have one member whose primary job is to figure out what all of these characters have been doing between events. We take input from our NPCs as well as our notes and the direction we'd like to see the event go, and then a week before the event, we meet with our dedicated NPCs (our "Guildees") and run them through the upcoming event flow and their NPCs. In NPC camp, we have write-ups for all of our NPCs - the bad guys (the Harkonnians) have a culture packet available which our Guildees are read up on, and we provide a "here's why you'd be near the town this weekend" write-up. We have individualized townie write-ups about a paragraph or two each relating how the townfolk NPCs (all Guildees) have been doing, i.e. "Bob the Cow Farmer - Business has been going well, you've just returned from the town of Shade's Pass where the annual cattle convention was held. Between securing a recent prime stock and nightly stops by the trade tavern, you managed to come out ahead. Feel free to brag about how you expect good things in the coming years, etc." "Myrtle the Rutabaga farmer - Things have been okay, the PC Sir Bramus taught you how to wield a staff in order to fend off the giant killer bees if they return. However, Bob the Cow Farmer has been letting his cattle graze too close to your rutabagas, and the southern plot has been trampled time and again. You'd confront him directly, but last time you complained, he threatened to pound you something fierce."
That allows for the two NPCs to interact in a meaningful way both with the PCs and each other - Myrtle might buy Bramus a drink in the tavern, or even try and get someone to talk to Bob on their behalf. We have all sorts of little mini-stories going on, like a secret admirer who makes baked goods for the object of their affection and gets the players involved in helping deliver the goods, etc.
We also have write-ups for ad-hoc NPCs - i.e. "Sailors - if you're playing a sailor who just came into town, this is the news you bring from the mainland: <blah>. The going was rough, the Harkonnian patrols have harried many of your fellow sailors on other ships, it was just by luck and a touch of prudent cowardice that your captain was able to make it through." "Soldiers - write down your name in one of the lists of local militia units, no more than four people per unit. Unit A - you've come in from patrolling the northern ridge for the past month. You saw lots of Greylings, but a surprising lack of Land Sharks, unusual based on what you experienced last year."
We encourage our NPCs to talk with one another in Monster Camp about what they experienced that event, and have followed Seattle's lead with giving each of our NPCs a mini-steno pad to take notes on about what they did, what they experienced, who they saw doing stuff, etc. Sometimes we write events that showcase a particular NPC in some fashion, such as an event where our local pecan farmer found a genie bottle and the chaos that ensued, or we script out specific little moments for them to play, such as an interaction between our local town noble and his aunt who happens to be visiting from back home. PCs paying attention to these sorts of interactions have always had a leg up when it comes to solving certain interactions.
We place a premium on consistency, pushing hard to make sure our volunteers are all on the same page, so that when we're inconsistent, it matters. We minimize the "oh, that NPC just didn't know about this other thing that is going on" factor, and it becomes "Hey, that guy just said that Shade's Pass was a quiet, small town, but when I spoke to Bob, he was going on about the big cattle convention. I think that guy might be a spy!".
It's not a small amount of work - I boggle at the way my wife can handle all that writing and her fourth year at medical school at the same time. But I think it pays off in big dividends, both overt and not-so. We generally get a 2:1 PC:NPC ratio or better, which I'm given to understand is pretty good (though, I really really want to push for 1:1... what can I say, I'm greedy.

). Our PCs seem to really enjoy it, and our NPCs really start to care about the characters they're playing. The line for who is what isn't necessarily blurred, but the line of whom you should care about definitely is.