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I'd definately go for one handed if you intend to kill enemies with sneak attacks, unless you're going for a unique build or are roleplaying. The blade of woe is a really good dagger and daggers can inflict up to 30 times damage, while two handed weapons are capped at around 9 times damage...
I played both sides, and preferred the stormcloaks, mainly because they're more manly and tough than imperials.
Also joined them because i murdered the emperor during the dark brotherhood questline, would make more sense to fight the empire.