-If you join with your arena team you can play teams from both factions.
-I have not received any "honor" points from my lvl 70 arena games. I think what you mean is that you can only get arena points from level 70 arenas, not to be confused with honor. I have played both rated and non-rated games and neither one has been giving "honor" for kills. Also I think their system is bugged right now on beta because my 3's team went 26-6 last week and I didn't get any arena points for it while my team mates did. T_T

I've played a lot of 2v2 and 3v3 @ lvl 70 now and there are just matchups, especially in 2v2, that really favor one team. One problem I forsee with 5v5's is that the arenas are too small, especially the blades edge one. The nagrand arena is decently sized for a 5v5 but I'd still like to see just a plain area, no pillars or bridges or whatever else, that is decently sized.

I really wonder why they put in Blade's Edge Arena like they did, it's just a horrible map, skeletons on the bridge and the sand making simple things as walking around a pain in the ass. If it's still random on live servers when the arenas are rated I can see my self hiding and leaving queue for all Blade's Edge Arena invitations because of the poor design and the LOS disadvantages casters suffer from in that arena.
Nagrand however is awesome, the only gripe I have with that arena is those silly Tornados, adds a level of randomness to the arena that I do not appreciate.

5vs5 might be fun if you have a proper group for it (friends/guildies etc) but from all the testing I did on PTR I just found em very very boring, another poster called it a clusterfuck and I can only attest to that - especially in Blade's Edge.
I'm afraid that if you wish to advance in the arena system you have to resort to doing 5vs5s or you won't accumulate enough points to be worth the time investment etc. pigeonholing people to get a 5 man team. So far I've been very pleased with the Arena type fighting and have had a ton of fun, I hope it continues in TBC.

The different terrain adds variety and forces you to possibly different strats for the different arenas, though unless it's been changed the Pillar in the blades edge arena you can jump to could be a pretty huge point to control since you can pretty easily block all melee from accessing it. Also if you especially hate the terrain in one of the arenas, in BC you can Q for just 1 of the arenas if you Q from the actual arena and not the goblin in the major cities, that's if it hasn't been changed since the beginning of beta however.

Sorry to nit-pick, but I think cooldowns are reset at the start of each arena fight, not the end. I think I remember coming out of a match on the test server with things on cooldown, and I know I entered matches with trinkets on cooldown, but when i zoned in they were ready for use.

And to answer the question, I vastly preferred the 3v3 bracket while pugging because it was more controlled - i could keep track of my team mates and the enemy and manage to keep everyone at the ranges I want to keep them at - in 5v5 people were running around all over the place and the enemy usually wasn't grouped enough to DPS properly.

When i signed up for a premade though, 5v5 was a blast. 3 hunters + Paladin + Mage generally meant we could stand at our gate and focus fire down anyone we wanted - since we had a team we could set out guidelines ahead of time about what order enemy classes needed to die.

And a wish-list entry: I wish people could click a sort of ready check button in buffing time - if everyone on both sides is ready, the match begins, instead of waiting the full preptime. given how short the matches are, the short preptime gets annoying when you're in a team that can finish all buffs in 10s.

Reagents: I think buff reagents should be free, so people can do Arcane Brilliance and Prayer of Fortitude and Greater Blessings without reagents. Combat reagents on the other hand I don't know. I don't see them making arrows or poisons or bandages free, so I don't see why blinding powder or soul shards should be free either. Especially not with how annoying it would be for blind - if it cost no reagent, having a rogue on your team would mean one person on the enemy team would be out of action for 15s every game - and that's almost long enough to win a match.