The Good(Saints) - Do good things and good things will happen to you
I think that good Karma should get benefits such as more Quests but fewer XP per quest, various combat perks.
Saint VS Saint - No PvP except for duels. Get a bonus while grouping if everyone has good Karma
Saint VS Sinner - These two groups can always kill each other regardless if they're flagged for PVP. You should still be able to group with Sinners but experienced gained will be reduced (and yes they can still kill you while grouped)
Saint VS Merc - Can PvP if flagged
The Neutral(Mercs)
Mercs get a wider variety of quests, and can get along with most factions. Has the ability to trigger Karma Specific PvP Flags, ie, Flag against Just Evil or Just Good or Just Neutral or any combination of the three, normals rules would apply.
The Evil(Sinners)
Sinners should get more experience from killing other players and NPCs, law enforcement in towns will not help or might turn against you. Sinners would have the ability to rob other players, if you they give you something, you have to let them go. Sinners would be able to kill anyone at any time, however, would recieve a debuff if that person was not PvP Flagged.