Ooh here's an innovative idea: Give us the 10 races we know and love from TES, don't assign any race to any faction, and let players join warring factions (or not if they wish to live a peaceful life)! Holy crap I just unruined everything!!! Oh wait, the combat...damn...still ruined.
Yeah the fact that I have to choose a faction based off of my race is a little bit disappointing. Joining a faction should be a completely optional thing, since I am sure that not every dunmer, altmer, or redguard for example are members of the factions of their races home region.