The newest Blizzard Insider, Blizzard's newsletter about their games, reveals some more information about World of WarCraft.
Will characters in World of Warcraft have alignments (good, neutral, evil, etc.)?
Traditionally in RPGs, a character’s alignment helps determine how NPCs react to that character. Currently in World of Warcraft, the way that this sort of interaction will be affected is through the character’s faction and reputation. World of Warcraft’s factions are the Horde (comprised of the Orcs, Tauren, Undead, and Trolls), and the Alliance (made up of Humans, Dwarves, Night Elves, and Gnomes). In keeping with the history established in the previous Warcraft games, there is an uneasiness between these two sides that permeates the atmosphere of the world. Non-player characters - such as quest givers and vendors - will respond accordingly.
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