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Did you watch the tournament? The Dwarves were crushing everyone. They need to be nerfed, and severely. The second overpowered faction is Humans. Training 20 Paladins a week is excessive. Either the second building for retraining needs to be removed, or the cost of training Paladins needs to be increased. Let them train Archers instead. Dwarves need to have the Rune of Exorcism, the Rune of Elemental Resistance, and the Rune of Magic Resistance banned. I think everyone saw in the tournament that they are completely overpowered. It's simply impossible to counter the Dwarves. Against Chaos, they use the Rune of Elemental Resistance, giving two creatures 50% immunity to fire. Against Darkness, they are protected by the Rune of Exorcism and the Rune of Magic Resistance. With the latter, the Dwarves even steal Vampires. So how do you kill them? With Phoenixes or Elementals? With their defense, it's impossible.
In Heroes 3, the Demons had Magogs that fired Fireballs in an area, Ifrits had high speed, which gave the Demons mobility on the map. Broodlings could summon more demons, which on large maps allowed them to gather huge armies. And finally, Devils had retaliatory attacks and passively lowered everyone's luck by -1. So, in the third game, the Demons will be stronger than in the fifth. By the way, you could give the Devils similar abilities in Heroes 5. This would at least somehow strengthen the Inferno. Because right now, this faction is at the very bottom. Only the Undead are below them, and they've had everything taken away.
The Undead simply have nothing to work with: Vampires have had their growth rate reduced, the blind factor has been lowered, and the duration of the blind effect has been reduced, the Temple of the Underworld has been removed, Liches have been nerfed, and the Bone Pillar has been moved to level 9, so it can't be built in the first week. Instead, Bone Archers have been strengthened, and Liches have been given the Skilled Undead Raising skill. In my opinion, this is completely unfair and unbalanced. The strength of the Undead lies in raising the dead, but where is it if there is no Temple and Necromancy has become useless? How can the Undead compensate for their low stats?