AGREE wholeheartedly.
Faction differentiation is needed badly is all respects. Right now playing any kingdom faction is nearly identical to playing any other kingdom factions. Empires are very slightly different but not much.
Bottom line is that Elemental needs more differentiation in almost everything. Even within a faction there's really only two different units to build: sword + shield or two handed weapons. Thats it, thats all the differentiation there is. Yea, there are archers, but there impact is EXTREMELY limited right now. There are diplo tech creatures but these are also rather limited and uninteresting.
Why its needed:
1) Re-playability. Most important factor in my opinion. Differing factions gives you some incentive to play the game again using another strategy. Right now once you can beat it with Tarth you can beat it with Gilden you can beat it with Capitar.
2) More interesting decision. If various factions have different weaknesses or strengths, or even if different units within factions had different strengths or weaknesses it creates a much more dynamic environment where you are trying to counter something you opponent is doing. I'll dream for a second. Say Reslolyn is building bone golems, extremely powerful magic creatures that cost 10 crystals apeice. They virtually wipe the floor with anything on the battle field. However, they have a weakness, they're vulnerable to weapons imbued with life magic. You've had a sword available for awhile now that has this option only is was significantly more expensive than the alternatives with equivalent attack values. However, with that +100% vs. undead creatures (such as the bone golem) it becomes a worthwhile option. Crank out a few Soldiers of Life as a counter to those bone golems. Right now there is NOTHING in Elemental that has a dynamic like this. It almost always just boils down to armoring up two types of soldiers, giving them the best weapons, repeat.