As learned in KotOR 2, the Sith and the Jedi were at one point the same order of force-sensitives. However, the Jedi Masters of old, of course.. wanted them to remove emotion and anything of human indulgence aside, and completely devote to the Jedi way. Of course, the apprentices, masters, etc. who did not agree with this, and wanted to retain their freedom for knowledge, emotion, and choice, obviously said "Fuck you" and left the Order. They were branded "evil" by the Jedi Masters in order to stop the other apprentices and masters from following them, with the propaganda of "Anything not us = DARK SIDE! OH NOES!". The Jedi that left the Order gave themselves the title "Sith", as they did not want to be recognized as any affiliation to the Jedi Order they left.
Personally, I think the Sith were in the right in such. However, emotion and indulgence without control leads to dark places and corruption, which is the fundamental flaw of most of the Sith you see in George Lucas' films, and somewhat in KoTOR. Though, the Jedi are equally as fundamentally flawed in the manner that they restrict emotion and general human desires, cutting children off from their families and making them completely devote to the Order. I mean, come now.. you didn't expect people to rebel taking away sex, love (along with most other emotions), and general freedom from your Order's members? Pfeh.
In basis, neither side is generally correct. One preaches desire and indulgence without limitation, and one preaches almost total restriction from the outside world in sacrifice for the "Greater Good". Which is why I choose neither side, and do my own damned thing. Though I tend to have natural inclination towards the Sith myself, just suits my personality more.