Gnomes have been popular in my group's 3.5 campaigns. My son's currently running Binkadink Dundernoggin, a 19th-level gnome fighter who's the party tank (despite his three-foot size, he's a deadly menace with his magic glaive) and rides a jackalope steed into battle. In another campaign run by that very same son, a different player's running Cramer Appleknocker, a 7th-level gnome cleric of Fharlanghn. And in a previous campaign, I set the PCs up against a gnome lich named Toofles Pigwilligan in two adventures (since they failed to destroy his phylactery the first time around) - and in another adventure, their entire Adventurers Guild was almost permanently taken down by an evil gnome baker, Pogo Snuffmuffin.
So yeah, I love gnomes. They're more than welcome in my campaigns. (Halflings, on the other hand....)
Johnathan