Well, I killed a few giants last night in Velious and I got the expected faction
hits

Faction with two giant clans went down (can't recall the names off the top of my
head)
Faction went up with Claws of Veeshan (dragons)
Faction went up with the Coldain.

So, apparently the way it works is..

Giants vs Dwarves
Giants vs Dragons

Dwarves and Dragons don't appear to affect the faction of the either from what I
can tell. So you could potentially
kill dwarves to gain faction with the giants and remain neutral with the
dragons. Or kill dragons (the wurms I found
last night in the Western Wastes were all green to me at level 51) to improve
faction with giants and remain neutral
with Dwarves. I've decided to kill giants with my wizard to gain faction with
dwarves and dragons and to kill dragons
with my paladin to gain faction with giants. I'll have to find something else
to kill to gain faction with the dwarves for
my paladin. Speaking of factions, I also killed a few orcs in the zone adjacent
to Iceport, but with the faction bug, I
couldn't tell which factions were actually being affected.

Also, entered a very very nasty dungeon. It was an ice tower in the Western
Wastes. Started with a K I believe.
Be careful in there. Ended up falling off an icy ledge (note to self: use walk
on slippery slopes) and the only way
out led to a room full of Ice Kobolds that conned even to my 51 wiz. I had to
gate all the way back to the Dragon
Bridge.

Good news is.. It appears that most mobs in Velious actually can't see invis.
My wiz explored most of the Giant
city even though he's probably KOS there. Only one giant could see invis, and
he appeared to be either a druid
or an enchanter since he was buffing mobs around him with a speed-related spell.
Also, every mob I encountered
outside of dungeons couldn't see invis. And no mobs in that dungeon could see
invis besides a Kobold Prophet.
So, invis appears to be much more effective in Velious than it was in Kunark.

Valerian, 51 wiz - Rodcet Nife
Soulsinger, 10 bard - RN