If I understand your term "faction" correctly,
this subforum is in good part dedicated to the task.
My experiences with it are like any other, really. Once in a while, you get a particularly good gig going. Sometimes it turns out as average, but barely makes it. Often it's flawed, sometimes in concept, execution, or both, and that kills it over time. The rest of the time, I find it simply dies in its infancy.
Adding the term "wars" tends to cause more problems in my experience, as it indicates some sort of competition is going on, and competition between faction players tends to get poor results. It's a common philosophy to nudge things in your own favor when writing if the game isn't highly regulated. Likewise, if it's highly regulated, it becomes much less interesting. Whenever "winning" is involved, humans have the natural inclination to cheat, and that draws me away from the concept.
If it's well done and the people involved give two shits, it can be quite fun, but it is otherwise frequently plagued with problems that have more obvious edges than character-to-character interaction.
As for groups, they've ranged from 3ish people to a good dozen.
The closest I'm doing to "faction wars" lately is hotseat campaigns in Medieval 2 with a roleplaying twist, which range from 5 people to a little over a dozen.
