Update, i've also edited the OP with this.
After looking through a lot of replies to this post I can see that there are a few on how the demo is old, and some about how AI is apparently very difficult to program.
If the latter is true, then how is it that we have AI players in games such as PES 2012 and Total War: Shogun 2, more often that not outsmarting players when they play in real time, anticipating what players do, what they are going to do, and (in PES) learning how a player plays, and taking advantage of and exposing the players weaknesses.
If all of that is possible in other games, which might possibly have a smaller budget than a gaming blockbuster like Elder Scrolls, how is it that a (most likely combat trained) AI character cannot simply look around for the threat after his comrade is killed?
On to the point of the demo being old, all I can say is I hope Bethesda are aware of these problems and try to fix them best they can before the game is released, perhaps Bethesda could see these complaints for the demo (the only complaints I and others I see have for it by the way) and act on them.
In conclusion, I love games, open world games, Role playing games, the reason I posted this thread was a long shot to possibly bring it to the developer's attention, to bring to other gamers' attention, and possibly raise the awareness of the flaws in games so we can all enjoy them the best we can and play them for years to come.
"Live another life, in another world."
Todd Howard
P.S. I would like to apologise slightly for the title of this topic, it should be titled "Skyrim's AI looks outdated and average" I am also only slightly bothered by the physics in hindsight and even though that giant did annoy the hell out of me; I am much more concerned with the state of the AI.