There have been a countless number of folks that have been begging for factions; some went out and got some scripts just to have barely working factions, others such as me and you don't give a flip about factions either because we don't want them, or we don't need them with the size of our player bases. The subject of factions has become an irritation to a lot of people as of late because of the controversy it has caused. The irritation leads to frustration, through some people's greed to have factions before they were supported by the core, this will lead to even more frustration and a ton of complaints of which aren't supported via the RunUO forums. In my opinion I think that's why Phantom feels the way he does, and quite frankly I don't blame him; I'm just tired of the bashing and complaints about factions, not to mention the begging that has gone on. For your statement on the size of the shard and the use of factions, from what I've read thus far, you are correct in your assumption, factions won't benifit a smaller shard.
As far as I'm concerned with people using the wrong faction system as mentioned in this thread; I'm going to have to take Phantom's side on that, based on history, futureland jumped the gun to build an uber elite shard instead of checking and planning first. If he loses his characters due to a wipe, I'm afraid that I would say "That's what you get." I had to do a wipe just to get rid of the dovPlayerMobiles. It's a fact of RunUO life, add a major package that affects PlayerMobile and you are asking for trouble, unless you are the greatest scripter alive.
I am thankful for RunUO, the new Release that is pending, and the community here at RunUO; a big thank you goes out to all the folks that helped to make RunUO 1.0.0 possible, you have done nothing but great work since the beginning and I look forward to the longevity that RunUO will enjoy.