Fantasy Divisions

Hey, I am a commish and it is our first year as a group. We are in a discussion about setting divisions in our league for next season.

My question is, how do you establish the divisions? I mean it is obvious now, who are the good owners and who arent and it is a keeper league. SO I cant see how you do it random because you could have one division loaded with good owners and sorry one with morons, and the not so good teams make the playoffs. Secondly, if you are in a league set up like this, can you give me your thoughts, pros vs cons?

It is a 10 team league.

Seriously, some thoughts on this would be really appreciated.