When making n NPC I do three things:
1) Simplistic background - name, race, sex, occupation, classes if any, immediate family if any.
2) Basic physical description - hair, eyes, ht, wt, scars, deformities, mannerisms, etc.
3) Take notes when the characters interact for the first time -
This is where I think I end up with memorable NPCs. You never have a second chance to make a first impression, so if it goes south, scrap em and start over. Give an excuse as to why they aren't there anymore - killed, moved, eaten by his children, whatever and move on. If they on the other hand like him/her, clue in to why. Flesh this out and THEN build a more in-depth NPC.
An example from play - From the leader of the Ebony Horse Clan (part of 12 Norther Tribes)
Yang Po Ng - To those on the outside, this horse master is a symbol of all that is bizarre about his clan. He considers himself an extension of his horse in battle, and his horse is his most trusted adviser everywhere else. None can question the strength or bravery of him or his horse as he leads his people from the front in almost all conflicts and his skill is such, no one has ever seen him unhorsed. (Think the OOTS ruler of Sapphire Guard type, this is a work in progress, I will define more later.) The name of the horse is Xian Ma - (SHE-en MAh) Literally - Mr Horse or Sir Horse.
THAT was the brief description my fellow DM and I (we ran 2 DMs to split the workload both at the table and away from it) came up with - He blossomed into an eccentric rider who had an odd sense of humor, a fierce determination and a horse that the other tribe's leaders tried their darnedest to ignore, but when a 26 hand horse is standing in the middle of a tribal tent whinnying when asked questions by his rider (which was also fun to role play)... Well, you get the idea.
The party LOVED this guy, almost as much as the leader they first met and who took them under his wing. However another set of leaders that spoke as a unit (2 twins and their grandfather) didn't fly so well (which is ironic considering they were a flying-mounted tribe). So we scaled their roles back and let them develop over time - eventually, they worked, but our original idea flopped. However, since we only had a little blurb committed to them, a re-write didn't cause a huge unbalance or upset of game play or suspension of disbelief. AND it didn't upset either myself or the other DM that our creation was ruined.
While I believe it is the sole responsibility of the DM to design the world or adjudicate its surroundings, there is certainly no reason not to pay attention to what the players think they see and the way the interact to make the experience more real to them. While not a total sandbox (shudder at the thought of players controlling the world) it gives them some room to feel a part of a living breathing world.