As a relatively new gamer (I started in '99, right as 2nd Ed. was on it's last legs) I never developed a great deal of attachment to D&D's races. While conceptually, I have no problem with Dwarves, Elves, Orcs, Halflings and Gnomes as depicted in fantasy fiction, I've never been a fan of their statistical representation in D&D.
For example, Elves have the inexplicable ability to detect secret doors in a dungeon. Elves don't live in dungeons. In fact, the fluff would have us believe that they live in the woods, outdoors, where by definition there aren't doors. How living in a treehouse out in the wilds makes you well adapted to finding hidden doors in a stone tunnel underground is beyond me. How such a talent is a racial ability shared by every Elf, regardless of their experience and subrace, is baffling.
It seems to me that most of these races are saddled with abilities that are extremely circumstantial to Dungeoneering. While that's all fine and good (the game is called Dungeons and Dragons afterall), I tend to run games that involve wilderness exploration or urban intrigue with only the occassional dungeon, and I'd like for the races to have abilities that might benefit them in the normal, non-adventuring life of their race. Moreover, I'd like for implied setting fluff not to make the race inflexible. For example, it has become more and more common for fantasy games to depict Orcs as noble savages rather than ravening monsters, at which point, the Dwarven bonus to attack rolls against them seems out of place, especially if Orcs are a player race that might conceivably end up in the same party as the Dwarf.
For the last several years, I've been running Arcana Evolved games partially because of the magic system, and partially because the races make sense to me. Even where abilities are based on the implied setting, they are still more generally useful and less limited than similar bonuses in D&D classes, IMHO. Moreover, the skill bonuses the races get often serve to counter-program other aspects of their stats. Litorians have a wisdom penalty, but get +2 bonuses to three wisdom based skills crucial to their racial identity. Giants, who make excellent fighters, are discouraged from being played as dumb brutes by having bonuses to Craft, Diplomacy, and Sense Motive. Quicklings, while having a 20 foot movement rate because of their small size, get the Run feat racially so that they can flee with the best of them (They don't have to outrun the Dragon, just the party fighter in fullplate). The list goes on.
Yet, there's something to be said for Foppish Elves, Hard-Drinking Dwarves, and Savage Orcs, and I find myself missing the familiarity of them from time to time, if not D&D's mechanics. Therefore, I'm currently working on homebrewed versions of these races to be used in my next campaign alongside Humans (which are the same in AE as in D&D), Giants, Loresong Faen, Quickling Faen, Mojh, and Verrik. Those familiar with AE willl also note that this list drops the anthropomorphic AE races and the Sprytes, who I have become somewhat annoyed with after three years of trying to figure out what a mammalian anthro looks like after taking a class that gives him snake-like scales, or the logistics of PCs who are both tiny size and force the DM to have the flight maneuverability rules handy in every single encounter.
The older I get, the more I have the urge to homebrew everything, races, classes, the whole nine yards, using D&D as a jumping off point for my own d20 Fantasy.
Robert "Just My Opinions" Ranting