I think there are at least two big arguments against this decision:

• as sti said, weaker or even average factions will never see the light of day anymore. Always Itars in play, always Ambas or Taklons. Is that really more fun?
• the information about other factions in play is important to determine a proper bid. GP is intended as a game with perfect information, now the auction system adds unwanted uncertainty

Also I would argue that playing a faction under less than perfect circumstances, or simply playing a weaker faction sometimes (but with proper balancing bids) is much more interesting than playing only factions for which all stars are aligned.

If people don't like the effect of auctions bringing variety to the game, they should just play without auction. It does not mean the auction system should suddenly be changed for everyone.

By the way, I would very much like the option of random faction setup (before auction) but it won't solve the 'problem' of 'unviable' factions and high bids.