Whenever a GM goes to run a game, one of the things that is pretty much a universal measure of success or failure is the amount of important NPC’s and their role in the game. Having no significant NPC’s means there’s no context for the players’ actions, while having too many will detract from the player characters’ abilities to stand on their own in the world. Similarly, it’s important that NPC’s be responsive and placed on the same level as the players, at least on a narrative scale.
Creating a living NPC is more than making a stat-block, but it’s also important to remember that much of a NPC’s life can be carried out off-camera. I’ve had moments where I get very involved with a NPC’s design and give them more attention than I should. Tabletop roleplaying is a group storytelling experience, and the GM will almost always receive the lion’s share of narrative influence and attention because of the fact that they are interpreting the rules and handling much more stuff than any individual player is or should be handling. This isn’t to say that you can’t give your players more of a focus, but they shouldn’t be defining parts of the universe in ways that give their character an undue narrative weight.
In the same vein, you have to treat each NPC as if you were a player, and apply the same rules in terms of recreating the narrative. If you don’t give constant handy breaks to your players, the villain or their supervisor shouldn’t get them either. Note that this isn’t to say that you should treat your NPC’s as if they were run by a player by giving them special privileges, either; they may get an Edge pool in Shadowrun or the equivalent in other systems if you want them to have a recourse against sudden, inglorious death, but you shouldn’t keep NPC’s alive forever just because they’re in a “no involuntary lethality” campaign.
One of the really important things to do when designing a major NPC is to look at them outside their narrative role. Sure, the king’s knight guarding the door doesn’t have to have a huge history, but the king himself should. NPC’s who live outside of their narrative role will look and feel a lot better to the player, and I can say for a fact that they’ll be more interesting to run and easier to remember.
In addition, it’s often tempting to create a major NPC on the fly when a session tapers off. Don’t. You are much better off if you come up with a character’s whole concept before introducing them, since changing them will cause confusion for players and yourself, and consistency in setting is almost as important as consistency in rules. Remember that the best way to handle players catching you in an inconsistency is to concede, since doing otherwise leads to a large argument or having to admit a failure and adjust for all the consequences that have happened.
When I work on an NPC, I like to create a concept map (also known as a mind map), allowing me to diagram out their immediate connections and beliefs. Doing this will allow you to both drop hints to the player and work out how and why they would act in cases that you did not foresee, not to mention create a deeper role in the setting by clarifying enemies, friends, and responsibilities of each character.
The important thing, however, is to make sure that a NPC is more than just a face; they must be full-fledged characters in order to have an impact in the narrative greater than just their actions.