Honestly, I think that the developers have got it right. Few factions, but there is some inherent thought and quality to them.
Besides, Morrowind is, in game terms, the land of freaks. So it's only fair that it has one too many freaky little factions.
Personally the one thing that I thought was missing was inter-faction rivallry. You can be the head of all of them. I'd have preferred it like the mafioso families in Fallout 2: you can't be a made man for all of them, in fact, once you reach so far in a faction, the others tend to spit on you. Then again, maybe they spat on me because I was sleeping with their boss' wife and daughter... messed up game, that Fallout 2.
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I hate the mice from Bagpuss. Never trust rodents with DIY skills.
"We will fix it, we will fix, we will stick it with glue, glue, glue, we will stickle it, every little bit of it, we will fix it like new, new new."
::SQUISH::
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