steeldragons
Steeliest of the dragons
Keep it simple, with categories.
Kobolds (include vermin and monstrous vermin)
Goblins (include hobgoblins, bugbears, wolves, and other "wicked wildlife")
Orcs (lump together various "barbaric/evil/underdark humanoids" into this camp)
Giants (many different environments)
Undead (from skeletons to vampires to zombies to wraiths)
Faeries (Unseelie, mostly)
Demons / Devils (A quick sampling of the hundreds available should do ya fine)
"Bad Guys" (Bandits, Necromancers, Cultists and the like)
Elementals (all sorts!)
Dragons (all sorts!)
Aberrations (mind flayers, aboleths, all those tentacle slimy things)
Oozes (all sorts!)
Those are your "antagonists." You also need creatures that aren't antagonists for the party to interact with -- from "seelie fey" through to exotic mounts, angels, genies, allied humanoids, and good dragons. You get more leeway here, since D&D has been kind of blah about "allied monsters" since it began, but including them as alternative treasure is not a bad place to start.
Well put.
As for the basic races that are intended to be played as PCs (Dwarf, Elf, Human, maybe Part-Orc, Hobbit, Gnome), the write-ups for those races would be in the PH in the character-generation section, so no need to repeat 'em in the monster section. (this has always struck me as odd about the 1e MM, that it lists the kindred races as monsters and essentially repeats what's in the PH in the rolling-up chapter)
To your basic monster categories list I'd add:
Birds and Avians (from wrens to ravens to rocs)
Constructs (basic golem types, to show they exist)
Dinosaurs (optional in any campaign but essential to have in the MM)
Elementals (a basic write-up, to show they exist)
Marine Life (fish, whales, sharks, mermaids, etc.)
Normal Animals (the usual suspects; and 'wolves' would go here instead of with Goblins)
Lan-"take a walk on the wild side"-efan
Well, by this method, we very likely end up with more than 50 entries...unless we adjust the premise to be "50 categories" which I'm sure would be possible but overwhelming.
Are you making these suggestions with the thought to get more creatures crammed in or simply as an organizational preference?
Remember, the original point of this was to generate a diverse but workable chunk for a new DM to a game, not overwhelming waves of creatures within categories.
And what of the things that do not fit into any category? I would say you'd need at least 3 similar creatures to constitute a "category." Unless you make up things like "Winged Beasts" or "Mystical Mounts" or that sort of thing. But that's just me.
I'm not saying I am unwilling to sort the creatures out this way, simply that the idea of throwing every possible everything in the first beginning book of a starter set without consideration for the party level could be...too much.
To that point, KM, I really don't think things like Aberrations, or even Demons/Angels ("outsiders" in general beyond the basic elementals)...are something one needs to get into at the very beginning.
There's a whole world for the DM and Players to become acquainted with before they start plane-jumping (or are high enough level to start conjuring/summoning these guys)...and at, say 1st through 3rd...hell, even 5th or 6th level, how many Demons or Mindflayers do you think you'd survive?
Nah. IMHO, those kinda creatures are definitely for later (higher leveled) sets or separate monster "expansion" material.
As for including the PC races as "monsters"...I've heard it bothers people before, Lanefan, but I have never really understood why.
Yes, there is some overlap with the general race description. But I always thought of it just as human PCs are considered unique individuals "above and beyond" their communities so are dwarf, elf, gnome and halfling "adventurers."
The Monster section entries would be more for societal organization and beliefs. Maybe some cool tidbits for DMs to throw in when a party comes across an elf stronghold or a gnomish town. If we stat out a typical Human Bandit, why wouldn't we stat a typical roving Dwarf?
I also recall, in many modules, encountering groups of PC races as encounters (a dwarf warband on the march here, an elvin hunting party there). So, they kind of need to be statted out, don't they? Just like a group of goblins to be encountered in a raiding party or orcs or human bandits for that matter.
To use in play, since the potential for conflict/combat is probably very real, shouldn't there be a "generic dwarf guy" on the books? A "dime a dozen" elf to throw in? As a DM, I certainly wouldn't want to have to generate every individual halfling in a scouting party as a PC.
That's just my take on that...
But back to mulling over the categorization things...I would not want to add in more monsters, since the stated purpose is a manageable chunk of beasties for a DM to work with in a "starter kit." And with that in mind...we have to think/look ahead at the same time so that we're not "giving the whole thing away" at the get go...gotta save some tougher/expanding things for the next "expert" set.

Thoughts?
--Steel Dragons