I've tried to understand it by talking to players on both factions, and I generally get the same responses. Each faction seems to believe that the other faction is composed primarily of younger, unskilled players, despite the fact that almost all my guildmates on both sides are adults, often married, often with young children of their own. Each side can tell you about horrible gank festivals in lowbie cities they've experienced (and I've experienced it myself as a lowbie tauren trying to make it in Tarren Mill, not to mention having several 60+ horde come kill all my quest givers in Duskwood), immature behavior like /spit or what have you... none of these things seem pervasively unique to one faction. As far as I have been able to tell, the players are basiclaly the same horde or alliance.
To a certain degree i think my perspective comes from lore, and has been shaped as the lore has changed. I was always aware of the Draenei as Akama's people, the huddled refugees who ended up in Illidan's service after the orcs and the Burning Legion almost totally wiped them out, but with the revelation of their true origin as the last survivors of an uncorrupted Eredar race and the role the orcs played in their genocide (and it's clearly established in books such as Rise of the Horde that the draenei were nothing but good neighbors, if a touch aloof, for generations before the orcs turned on them) I went from slightly apathetic in my faction selection to outright pro-alliance. I was never very comfortable with playing the role of the people who came in through the Dark Portal to crush and destroy everything in their path, even if they have had their shamanistic reawakening. While Lord of the Clans went a long way towards making me interested in playing as an orc, Rise of the Horde went pretty far towards making me want to be a draenei.
I've been ribbed by friends and less politely accused by others who are less friendly of being blinded by my desire to play one of the 'good guys', and I'll admit to a small degree of that. I do like to play a hero. I don't want to do quests where I feel like what I'm doing is manifestly wrong: this is why I never took part in the Blightcaller questline. I see no reason for the Alliance to be invading Nathanos' home and trying to kill him, and so I never had the Gorewood Bow on any of my ally 60's before The Burning Crusade launched. My tauren had it, because I have no trouble with killing members of the Scarlet Crusade. To my eyes, it's not that I want to be a good guy so much as I want to be able, however much I realize it's just a game, to be able to justify my character's actions. They should seem plausible and even worthy to him, at the very least. This is why I can get into playing an orc or a tauren but not an undead, and my blood elf paladin is very definitely conflicted about his allegiances. (It was actually somewhat of a relief to me when Lady Liadrin made the pact with A'dal in lore, because now Vorpal can think of himself as a champion of his people and not a thief of power he doesn't deserve.) Sure, it's role playing, and it's a minor thing, I don't spend a lot of time worrying about it, but it does matter and it does enhance my gameplay. As a tauren warrior, I was mad when I ended up poisoning one of my own people because a forsaken apothecary lied to me, and worse, there was nothing I could do about it. I couldn't rip his bony head off and punt it down the streets of Undercity for the affront. (I imagine tauren anger to be much like an avalanche, once it gets going not much stands in its way.)
There's certainly heroism to be found on both factions... the Orcish struggle to reclaim their past honor in the face of their fall to the demonic bloodlust, the tauren attempting to help their allies while retaining their own culture, strained as it is by centaur incursions and their new settled way of life, the darkspear trolls attempt to turn away from human sacrifice and cannibalism, even the Forsaken can have a rough nobility about them. I still kind of hate blood elves, though. Every time I play my BE pally I feel dirty.
A lot of my friends feel just the opposite. Some of them just cannot stand to play Alliance. For some it's the usual stereotypes about alliance players, for some it's a hatred born from PvP experiences (strangely enough, whenever I'm in a battleground I tend to hate whoever the other side is) and for some the ally side quests lack the same dynamism. Some people find human zone quests (like the Defias/Stormwind ones) depressing in their banality and I had one friend who rerolled horde because he didn't like how Magni Bronzebeard's daughter ended up.
When Daniel mentioned his hope for an end to neutral factions and a heating up of the conflict between alliance and horde in the expansion, I realized then that despite my Horde characters and my friends Horde side, I'd forever fall on the alliance side of that factional divide. As an organization, I just don't like the horde. It's got two peoples I like, one I feel indifferent to, and two I really dislike. The Alliance has no one I dislike: I even think gnomes are pretty awesome and that seems to be the race most people who dislike the alliance hate the most. (Night Elves being #2, and frankly, of your elven PC choices they're far and away better in my mind.) Plus they have Draenei, and I'm still holding out hope to get to play Broken.
Are you Horde at heart? Do you bleed blue and yell Lothar's name in Battlegrounds? Let us know how you feel about the factions.