I think they do have emotions. Maybe some showcase them more than others, but they're there. My big guy loved my pony. They hung out everyday, slept against the sides of their stalls so they were near each other at night. They were perfect every trail ride because they felt so comfortable with each other. Then the pony got sick and died. My big guy hasn't been the same since. He doesn't like trail rides. He hates the other horse we have(the other horse use to beat up on the pony when the three of them were out together). And every so often, when I *for some reason* feel like he's sad (when I feel it, I talk to him about how I miss the pony too) and go to put him in his stall, he walks in to the pony's old stall and sniffs around for a while. It doesn't happen very often. But I find it kind of therapeutic. To know he misses him too.
Dozer, the big guy, is very good at picking up emotions too. If I'm riding him and he decides to be stubborn and not do what I asked, he "all of a sudden" figures out what I want right when I start to get really fed up... And the one time I got extremely frustrated with him, jumped off, and ended up plopping down in the middle of the arena to cry (give me a break people. The great little pony had died a month ago and Dozer's training was nothing like it had been when the pony was around.) he came and rested his nose on my shoulder and back, kind of telling me, I'm sorry. Let me try again.
They are great at reading people's knowledge too. My pony always knew who to listen to and who to test. Now that Doz has taken over the "beginner horse" position, he's learning who he has to listen to and who he can get off by trotting...
That's what I think at least.