Being perfectly honest? They're intense body horror, in a way that is pretty explicitly insidious, often impossible to spot until it is already too late, and overtly evil in nearly all cases with a strong side of "The Virus"-style mind control. The only debatable faction of the Phyrexians is the Red faction, because Red is in some sense the antithesis of the turbo-fascist ideology that Phyrexia represents: it's the color of emotion, chaos, freedom, love, self-hood (as opposed to self-interest, as Red is theoretically the color of friendship too), etc.
There's a lot you can do with them, but making them explicitly part of the D&D universe would be Kind Of A Problem for a number of people I know. Mostly those who have survived abuse (Phyrexians are straight-up allegories for abusers) or who deal with gender dysphoria (since the whole "compleation" concept straight-up makes you something other than what you identify as, and then forces you to identify as that new thing.) Now, add in the fact that they're outright turbo-fascists and moreover implicitly turbo-fascist religious fanatics (Elesh Norn, de facto leader of New Phyrexia, is White-centered as opposed to the Black-centered leadership of the original Phyrexia.) It's not hard to see how this could be a touchy subject for a variety of people.