Aerie Peak US is the unofficial F2P server, and has a large and active community. Personally, of course, I have to recommend that you come join us over at Emerald Dream US, Horde-side.
As for classes, most are viable. Hunters are generally regarded as the most powerful class in the bracket and will usually top damage charts. Paladins are less powerful, but much more versatile. Priests are excellent healers. Rogues take some skill to play, but can be very powerful when used correctly -- especially against an enemy flag carrier. However, they're fairly squishy in direct combat. Druids are, like paladins, very versatile; they can make especially good flag carriers because they can move quickly in cat form whilst carrying the flag. Warlocks and warriors are generally regarded as being underpowered.
As for faction, that's up to you. At this point, the two factions are far more even than they once were -- rolling Alliance means that gearing up is easier, while rolling Horde means quicker queues.