But why do you need two separate races of elf for this split. It could just be a fluff difference. One group likes to pretend they are high and mighty, the other likes to live close to nature; but they are both still elves. I could handle that. Why do they have to create a new race for things that are better handled just with story?
For the different racial stats and abilities. In my campaign, all elves are the same species, but the elves live in the real world and are tree-hugger types (wood elves), the eladrin are more closely tied to the feywild, cities, and magic (high elves). In order to reflect the differences in background and the affinity with their environment, the two types of elves in the PH work for me, but they aren't different species; they just were raised in different environments.
The dark elves are also true elves that live in the underdark and are scary and creepy, but I'm ditching a lot of the Forgotten Realms drow feel, including the skin color. People who live underground have pale skin. Furthermore, no race portrayed the way the drow have been could possibly survive unless they littered like cats and had dozens of children over the course of their lifetimes. Not only do they perform evil rites and sacrifice their own offspring (a huge taboo which reinforces how *evil* they are), they also compete in internecine warfare and murder each other off pretty frequently. Add to that the fact that they are targeted for genocide by every adventuring party that wanders into the Underdark. So why aren't they all extinct yet?
Ahem. To wander back on topic, I think the dragonborn and tieflings fill a good role and I think I like them pretty well as races for the PH. What I dislike the most about both of them is the artwork. It's not that the art is bad, but rather than I don't care for the way they have chosen to portray both races.
Dragonborn have a lot of problems with their usual look in the core books. Their eyes are too small; it's hard to even see them in some of the paintings. Their lower legs are much too short. Their arms are longer than their legs in a lot of the art. That looks silly to me. They should have tails. They should not look like porcupines. They should not have boobs. I think they should have more color variation, if not the usual brilliant spectrum of evil dragon colors. So in my game world dragonborn have tails, no boobs, bigger eyes, and fewer spiky bits all over their heads. I like the dragonborn portrayed at the start of the chapter on ritual magic, but that's one of the few that I really like. Many of them, including the one on the front cover are very ugly. Beady little eyes aren't attractive.
I'm not sure that the appearance of tieflings needed to be locked down so much. I thought one of the characteristics of tieflings in past editions was that they had a variable appearance. Some had horns, some had tails, some had goat legs. I'm not sure where I want to go with that for my game. I do feel that tieflings should not have giant alligator tails that are 5' long. They should have shorter tails that are a bit more slender, or in some cases no tail at all. Their horns are too large, although I like some of the portrayals in the books more than others. I don't like the chin spikes and such on the guys. That's too freaky. Make them look more human with demonic traits, not like something that would be slain as a demon the instant it walked into a town. They started off as human after all.
In 25 years of gaming, I think I've seen someone play a gnome two or three times. We nixed them from our last D&D campaign in favor of a small lizard-like race that specialized in psionics (before the books added psionic races). Half-orcs were allowed, but no one ever liked to play them in our games, so I won't miss them. I don't think orcs and humans could cross-breed anyway.
Half-elves we came up with a special explanation for. The elves and the humans had been warring for centuries. The elves were upset at the prolific humans taking over all the land and cutting down forests. The humans just wanted to spread out and use the land that the elves weren't "doing anything" with. It kept going on until the gods intervened, and forcibly put a stop to it. They told the leaders of each nation that their children would marry, and the offspring of that marriage would become the rulers of the entire area. Elves and humans had not been able to have offspring at all prior to this. So the first half-elves arose out of this direct intervention by the gods. Half-elves are fertile with either humans or elves, and the half-elven trait always breeds true. There are no quarter-elves, or 1/8th elves, etc. So now the half-elven are the race of the nobility over a fairly wide area. None of the other races much liked the solution, but the gods have ways of enforcing their decisions.