But yeah quality > quantity.
That very much depends on what form quality may take.
For example, IIRC, one of the developers did a quality versus quantity comparison using marksmanship weapons in Oblivion. It was argued that, though more exotic weapons were removed (like crossbows, throwing stars, throwing knives, etc), and the remaining bows were significantly reduced in varying types, that was all compensated by the smoothness of the bow mechanics, the skill perks that bows now had, the visual detail of the bow meshes and textures, and the animation detail of drawing, moving with, and firing a bow.
However, in that particular scenario, I would very much rather have the quantity over watching my character smoothly fire an arrow.
With factions, Oblivion tried hard to to go beyond fetch quests with their factions. The problem with that, though, is twofold.
Firstly, despite Oblivion's attempt, its faction quests were the exact same fetch quests with see-through pretentious-brand dressing. Honestly. Take the Thieves' Guild for example. At every stage: I need this, or We need this. Or the Mages Guild: Go do this. Now go get this. Or the Fighters Guild or Arena. Go kill this. Go look into that. Other than somewhat pointless dialogue permutations, there wasn't much beyond it. Yet, that's not entirely a bad thing for reasons given below.
Secondly, for all its attempts to get away from fetch quests, Oblivion failed to recognize that, for the most part, that's what quests are. Are back-stories and motivations given? Of course. So they were in Morrowind, too. But you're still going to location X to attain/speak-to thing/person Y, for person or for motivation Z. But when it comes to the majority of factions, they are work organizations that don't make sense in having an epic building plot. As such, most (if not all) of the tasks undertaken for that organization are disconnected seemingly-random jobs that come up. Are there power struggles and stories to be told via the motivations? Yes, but even if the organizational quest-line takes those motivations to build a broad theme out of them, it doesn't come into play until much later on.
I see no point to shy away from Morrowind's model, which had no less than 10 major joinable factions, with an average of 28.3 quests each. If there is quality to be earned in culling the number of factions or quest per faction, I am disinclined to care much for that quality.