According to CS (and I just asked them about this a couple of weeks ago), being the Favorite School of a recruit is supposed to provide a multiplier to all of your recruiting efforts. Now, they didn't give me any information as to the magnitude of that multiplier, but they did say that it was supposed to large enough to make a difference in a recruiting battle.
In my last recruiting cycle, I was involved with a battle with a higher prestige school for a recruit. We had relatively similar (but not the same) efforts (adjusted for distance) and I ended up winning. I can't say that being the Favorite School was the reason, but my guess is that there was some value. That being said, I couldn't begin to quantify what that value might be.