A perspective: NPCs exist to be fucked with by you, the GM, in pursuit of making the game more fun for your players.
This starts with NPCs that are part of the PCs’ backgrounds. Depending on the style of your campaign, and the way that player-created content (like background NPCs) fits into the game, you may need to use kid gloves with these characters.
Having the villain establish her villainy by, for example, flaying a PC’s younger brother alive and wearing his skin like a poncho might be taking it a bit far. Then again, it might not.
Nearly every group I’ve gamed with, though, treats background NPCs like any other NPC: as fair game for whatever the GM thinks will lead to a better adventure, or more fun for the whole group. If you proceed with that spirit uppermost in your mind, you’ll do fine.
NPCs you create, on the other hand, are always fair game. Get the players to care about them one way or the other, then fuck with them — mightily and often.
- Kidnapped by bad guys
- Dumped by their spouses
- Mangled in woodchipper accidents
- Disappear without warning
- Get in trouble with the law
- Thrown in prison
- Fight losing battles
Make their lives miserable whenver it suits your needs. Don’t go so over the top that your players get gun-shy about having their PCs get attached to new NPCs (unless you’re playing Call of Cthulhu, of course…), but don’t pull any punches, either.
Remember: with the one caveat about shared creation (characters from PC backgrounds), NPCs are all yours. The best of them will become everyone’s over time — but not without some bumps in the road. Preferably some very big bumps.
Chew them up. Spit them out. Chew them up again — have fun with your NPCs, at their expense, and see what develops.