When you create a custom faction, what specials are MUST haves?

Not really all that many combinations yet (theres what 20? and very few points to spend), and none of them make all that much of a difference at this stage yet (They will hopefully make a lot more of a difference once the game is properly balanced). There are a few that are more interesting than the others. Evil is a good one (prevents your kids from joining the enemy), as is Egalitarian (can make a lot more troops with a smaller population). There are 2-3 others with decent effects (such as Great Warriors) but they are too expensive right now to consider using. 

Hopefully FrogBoy will come through with (what apparently is now) the post-release stuff so that us modders can add more depth to this area. Since the main focus is on the differences between the Factions right now, I'd be absolutely shocked if they suddenly decided to add more abilities to make the races more unique. We can always hope

Being this a constantly evolving and changing Beta, I suggest Cheese.

I like the one that enables windmills, which will increase your "material" production.

Industrious enables you to triple your T1 Material production for just 3 points. 

Industrious is my personal must-have, ever since we lost the ability to build lumber mills.

I'm pretty sure that Weapon Masters/Armor Masters/Master Archers don't do anything right now, so that's something to avoid. Personally, I'm not sure that these will be all that great even once they do work. Admittedly, they're pretty cheap.

IIRC Weapon Master/Armor Masters allow you to buy some nice weapons/armor in the shop right? I might be remembering wrong haha.

I sort of like the concept of Capitar being a bunch of really diplomatic assholes, especially funny since my family are diplomats. I think the first thing I'm going to concentrate with them is making a really weird cheese build with "diplomacy" as my primary weapon. I don't have a clue what that's going to look like.

Most of my 4x experiences revolve around Charisma, Trade, Telepathy, Fame, etc... I'm glad to see that that option isn't a complete waste in Elemental.

Money has always been the game winners in just about all Empire building games. Even in MOM you could get a clear lead early taking Alchemy and economic boosts (as well as rasing taxes sky high) and churn out summoned units by the hordes. So, in Elemental I'm taking things that deal with income and resources as to me that is what wins wars (ala USA WW2 production, they had excess resources to send chocolate cake overseas to the troups). Knowing that the ai probably isn't going to be much of a challenge helps to pick lesser catagories of abilities and traits as well. In a multiplayer game vs humans I would probably take a more balanced build of power and income.

Well, at the moment the balance is.. unfinished, so it's hard to predict what will be good choices in the end. Great warriors is a good example, it basically doubles the combat speed of trained units (can't remember if it affects sovereign/champions), but at such a cost you can't get much else - it's hard to fit in, but if you do no one's going to be able to match you with a standard military. Not that it matters when your sovereign can stomp the AIs singlehandedly, but hypothetically speaking, it would be far too powerful if you were otherwise evenly matched with your enemies. Weapon masters on the other hand is useless, it gives you access to an overpriced sword that's not really better than far cheaper ones you can get through research. Meanwhile armor master gives you an overpowered/bugged breastplate that's significantly better than heavy plate and free for units you train (also available to sovereign/champions at significant but worthwhile cost). Really too early to judge these abilities, until a few more iterations of balance and bug fixing.