I'm thinking of trying Daggerfall for the first time, are there any mods I should get?

DaggerfallSetup contains most of the user-made additions for Daggerfall. For the most comprehensive overview I know of, please read the Daggerfall-related entries of uesp.net.

While the vanilla experience of Daggerfall is charming in its aged glory, I highly recommend downloading Daggerfall Unity and adding whatever mods appeal to you on Nexusmods. Daggerfall Unity ported Daggerfall into the Unity game engine, allowing it to run clearly in modern resolutions with some minor convenience/QOL features but if you add mods, you can end up with a sort of unofficial "Enhanced Edition". What I mean by that is you can get much better graphics, some slightly modernized gameplay (you can get it so it only touches the really inconvenient aspects of the outdated gameplay) and even new content outright.

Or you can just play the game as-is with Daggerfall Unity and benefit from modern resolutions and access to console commands (as Daggerfall is still a really buggy game). However, it's downright mind-boggling what fans have done via Daggerfall Unity and its modding community so I do recommend at least checking some of them out!

Daggerfall Unity is fine, as long as you don't expect to be able to use the normal Daggerfall user interface (HUD, moving, attacking, ...). The DFU guys seem to think the new "modern" interface is better (or there's a bug in DFU, or providing the classic one is simply not high on their priority list), but players who know and like the old one should be warned.

I play both classic and Unity Daggerfall, and some DFU mods are really great, but using the new DFU interface always feels clumsy for me (possibly because I'm so used to the classic UI). And the often quoted Daggerfall bugs seem to avoid me, except and rarely the void bug, which I can handle (I'm aware that spells and other mechanics not always work as they should, but I have no problem living with them or avoiding them).

Well, to be honest, the classic UI that covers the bottom of the screen is pretty much objectively inferior due to the fact that it takes up a third of the screen and requires you to click the buttons, as opposed to the more minimalist modern UI that lets you see the game world mostly unobstructed.

Preferences are fine, especially if you grew up on the original UI, but there comes a point where nostalgia has to be separated from objectivity, at least when reviewing a product for a newcomer. Daggerfall itself can be praised because of how it's one of the deepest RPGs ever made but its original UI is, for all intents and purposes, a very rough UI that only really will appeal to people who grew up on it (or people who grew up on old school RPGs that had similar UIs).

That said, I am somewhat surprised there isn't a mod for DFU that adds the old UI back in. Given the sheer amount of freedom DFU offers the game and the modding community, it does feel strange that they haven't at least tried to make such a UI.

I suppose I should have expressed myself better. The classic interface is available in DFU, but it works slighly differently. You can always choose between "fullscreen" (the game window covers the whole screen, no function icons) and the bar displaying the function icons on the bottom of the screen (which covers about a fourth or fifth of the whole screen). I want this bar displayed, and I can have it this way in both classic DF and in DFU.

In classic DF I control movement with the keyboard and actions by using the mouse and clicking the appropriate icon on the bottom of the screen. In paerticular, mouse and movement have nothing to do with each other.

In DFU, I can't do this. Moving forward and backward, and sliding left and right work, but turning left and right doesn't (at least I don't know how to get it working). Using the function icons with the mouse works, too.

There is a workaround: When I press "enter" ("activate cursor"). I can fully control movement with the keyboard, including turning left and right. Even more conveniently, I can move forward and backward with the keyboard and change direction with the mouse (which also lets me look around), without clicking it. But then I can't access the function icons with the mouse anymore. Yes, I can draw a weapon using "Z" and then use it with the right mouse button, but this works very clumsily (not least because looking around is not deactivated when I use the right mouse button - try it, you'll know what I mean). The workaround is to use the first mode for walking and looking around, and switch to the second one when I want to do anything (talking fighting, accessing the inventory, spells, etc.). It works and I'm slowly getting used to it, but the additional keystroke ("enter") before and after an action, is somewhat clumsy, too, and takes time, which becomes an issue in some fights.
I suppose that many players prefer to play in "fullscreen" mode and to use the keyboard and mouseclicks for actions, but I can't enjoy playing in this way.

It may well be that the issue I described above (turning left and right doesn't work without switching mouse usage modes) is a bug or a design oversight, but then it should have been discovered and fixed a long time ago - or this part of the UI functionality has never been tested (which I would find hard to believe).

With that said, I do like playing DFU and its mods. But when I want to enjoy the original Daggerfall feeling, I prefer the old classic game, despite its graphical shortcomings.