I'll never understand the hate for the little people. Races, just like classes are options. If you don't need or like a particular option then don't include it. To me, however, halflings are as much a part of D&D as dwarves, bards, and magic weapons. Also, I knew when I saw the title that this thread was going to end up being a "Down With Gnomes!" rally. I think all the races are fine, depending on what a DM does with them.
I've still to hear a solid reason why halflings or gnomes don't work while dwarves are almost universally accepted. I can understand those who only want humans in their campaigns for the sake of realism, but I can't wrap my mind around this pointed hatred of particular races. While it's nowhere near as serious, it seems as empty and unrewarding to me as disliking or disregarding any race in the real world. In short, races are as diffuse and complex or as rigidly simple as the DM chooses to portray them. I don't see what can be gained from removing any of the core races.