Race: With the release of the Burning Crusade Expansion pack there are now four races that can play Paladins. The differences in stats between them all are rather small, especially at high levels so generally you should pick the one that is the most aesthetically pleasing.
There are some racial abilities though that you should consider before making your Silkroad gold choice.
Dwarf: Stone-form
Grants immunity to Bleed, Poison, and Disease effects while active, also increases armor by 10% lasts for 8 seconds with a three minute cool down.
Part of this ability is wasted since paladins get a spell to dispel disease and poison effects, but it’s good for getting rid of bleed effects (good for PVP) and the extra 10% more armor is nice for when you’re losing a fight. But it’s not enough to save you.
Gun Specialization
Increases your gun skill by +5.
This is useless since paladins can’t use any ranged weapons.
Frost Resistance
Gives you +10 to frost resistance.
Paladins can do very well in PVP since they are almost impossible to kill, but you will still want to try and stick with groups to bring out your full potential.
By itself this is not enough to save you, but each of the races gets a resist bonus and frost is better then nothing. Especially since there are fewer pieces of gear with frost resist compared to other resists like fire and nature.
Find Treasure
Overall a dwarf only has one useful talent and two sort-of useful talents. They have higher combat stats then a human so they make good melee and tanking paladins.
