NPCs are really important to a RP, they help make the world feel more real and alive. If it is just a few player characters and some cardboard cutout NPCs then the world doesn't feel as full and the story can get stale. But then having to many can take the focus off of where it should be, the player characters and their story. Because of this I tend to have a mix of NPC's when I GM with differing levels of importance. The really important ones I tend to treat like GM-PCs and they are off limits to players just like any PC would be, I try to keep them limited in number so that I don't get overwhelmed juggling them and that the players don't feel like they are simply witnesses to my puppeteering of the NPCs (something I have experience from the other side, it's no fun). But they are useful tools to moving plot and getting people where they need to be. I find I add these sorts of NPCs gradually, filling in gaps needed in the story. 

But then I have other NPCs that the players have limited access too and I communicate this in the OOC as the story progresses. I've even handed control of a few of them over to players who acted as co-GMs a time or two in the infancy of my GMing. I've even offered a few up as sacrifice in posts so that the player in question could shine in their handling of the situation. 

Then there are the ones that are a little more cardboard-y. The baker who is around the corner who warrants a name but not much more. I make lists of these so that there is coherency and that if for whatever reason the baker needs to become more important we know a name and some little things about them. Then there are player NPC's, side characters important to the PC. Typically I let the players decide who can touch them/control them. On occasion I've taken these on as plot tools, with the player's permission. In my latest GM attempt (which I had to set aside because of increasing time commitments elsewhere) I encouraged my players to make up NPC family members just so I could make them pick one to kill off in something of a natural disaster in their second post of the RP. 

Regardless of how in-depth they are, a good NPC is there to make the world more real, to help advance the story and to [b]give the players chances to shine[/b]. 

[quote=BlessedWrath]
 Nobody wants to play second fiddle to a character that isn't even a real member of the party. [/quote]

This^ I had a GM in my early tabletop career who had a character named Arkady. He was broken in that he did was not made by the rules (though the GM swore he was) and his power level was above and beyond the PC's who were supposedly his level. Each and every encounter we had in that RP ended with Arkady swooping in and solving the problem for us all before anyone really got a chance to do anything. The RP did not last all that long as you can imagine but among my circle of gamers was born the term "Being Arkady'd" I still use it and I live in fear of doing that to someone. My use of NPCs hopefully reflects that fear.