What race is best for a priest in World of Warcraft

Good question, I guess the answer could be different for what you are trying to accomplish:
Horde :
- pve : I would go with a undead, the racial buff is very helpful when you are trying to heal and not be feared / charmed / sleeped in a raid.
- pvp : Again, undead is going to win with a semi-secondary pvp trinket.

Alliance :
- pve : Gnomes are good for their racial intellect bonus, however nightelf's can be useful for aggro management because of their instant vanish racial ability.
- pvp : Humans! Racial pvp trinket + stealth detection, allows for 1 extra trinket.