Their was an old game more than 10 years ago called Star Fleet Command
http://en.wikipedia.org/wiki/Star_Tr...rfleet_Command
eventually SFC 2 came along which expanded the total races to more than 8 in all (been a long time, but their was 6 in the first game)
We had a pretty good fan base that developed over time on Mplayer, In fact a few SFC fleets are in this game
Bottom Line adding more factions creates a "Community" of sorts, a more "Us vs Them" espically when interaction occurs between the factions, (ie PvP)
The Feds, Roms, and Klingons were the largest by far, but eventually the other less known Factions become a "Niche" group that is attractive to different kinds of players, including myself. Just the feeling of showing up a good Fed or Klingon player in "My less popular race, that I root for"
The game even including a "Dynaverse" which was a hex based map where you would be placed into an instance to do space battle and take over territory.
So in responding to the OP, I would encourage more factions, and expanding PvP options, or having a means to really make the universe come alive with faction interactions
1) it would increase the player base
2) Great for having more of a reason to be in a Fleet
3) Good for end game
4) More C-Store Revenue for the Company, How many more Fed ships and Bridges can they make?
Im not sure if developing in that direction for STO is cost effective though, I hope it would be.