I'm kinda split about this. I understand the benefits of having smart AI for NPCs in open world game but at the same time, I know the disadvantages of that.
I'll start with this: stupid AI although, as the name implies, is stupid, is actually a smart way for players to help player telling which NPCs are important and which aren't. NPCs who talk like a robot is not interesting and usually not important and players would avoid them. With so many NPCs, figuring which ones are important and which aren't, players have less NPCs to consider. That's an advantage with stupid AI.
That being said, that advantage is for games in which NPCs aren't the main focus. If you are making game in which NPCs are the main focus and talking to them is the main gameplay, then yes, smart AI is essential.