I'm not so sure about having AI handling conversations in the sims since the sims is so much more about letting the player feel what they are talking about but I am a bit curious about what AI conversations could do for games in the future.
I saw a youtube clip a couple of weeks ago where someone had implemented an AI to the NPC's in skyrim and instead of choosing in a dialogue tree between what you wanted to ask a npc about you could just write and ask them whatever you wanted and the npc generated a suitable response depending on what they had added about that npc.
Imagine if you could play in a different world like a fantasy rpg and ask and talk with people about whatever you wanted, that could be pretty interesting if it was done well.
But again, I'm not so sure about having that in the sims.