From my experience in a few official factions I actually found the limitations to be the main attraction, to me it was like badge of honour. As an indie you float about and do whatever the hell you please, which can be fun but you don't really contribute much or at least it doesn't feel like you do. Jumping into an official faction was to truly begin to contribute something meaningful, everything you do and say bares consequence as you no longer represent just yourself but the entire faction.
I've always viewed indie players as the civilians of Disco, you'd don't expect much from them as you wouldn't from a person you pass on the street. Official factions were the police you smile to as you pass, the military to nod in respect. Not as a symbol of power but as icons, figures you can distinquish from the crowd. Somehow that sense of being recognised has faded, maybe it's the streamlining of ID's and new features that make factions superflous or a different kind of player who simply ignores your function in the game. Maybe it's as Jinx has said and factions have limited themselves into distinction.
What could fix it? Any number of things really. For me, Jinx's idea about custom skins for faction ships would be a start and a little more involvement in the story would be nice, not a huge influence but at least a little bit of input in the factions direct.
