You won't be able to tell an old mechanic to go berserk, or a brave warrior act like a coward. You can also tell them to heal themselves, wait for you, ask what their best weapons are, put their weapons away, take their armor off, and keep a certain distance from you out of combat. Some NPCs have other special dialog. Some will make things for you, give you information on the current area you are in, etc. Some NPCs will also give you a bonus to certain skills if they are in your party.
Party members get better with time.
As you increase in level, they have a chance of increasing as well. You will be able to give party members any type of armor. To avoid confusion and look of clones following you around, they will look the same but their resistance to damage will change. We've changed how some of the skills work, but we did not add or remove any. There has only been one change in the Traits section.