I'm playing a halfling right now (3.5), and I have to admit that in some ways, they're rather bland. But in other ways, that's a good thing. If halflings were characterized as kender-like or hobbit-like, it would put a stamp on things that was hard to ignore. Instead, I've been able to come up with my own way to characterize my specific character.
In another campaign, of course, there are a lot of cultural things you could add. But for me, the characterization is all about sense of power. I decided to play this up primarily because I see 3E halflings as, well, not much different from small humans. It's not very flavorful, I must admit, but it does provide a way to play a Small character without taking on too much baggage.
I generally start with a simple concept--in this case, I wanted to try a monk that was very much different from the other monk in our party. Now, I could have picked gnome, but gnomes have some cultural baggage that comes with them. Halflings, on the other hand, don't, so I had a free hand. Hence, the halfling. The next step was: okay, so how do I build an effective base monk. So I thought about it, and decided that I would focus on mobility--and because of the size disadvantage for attack potential, I would aim for dexterity (weapon finesse) and as a way to work around the issue of size, sneak attack damage. Not too much, just enough to occasionally make a difference. So, three levels of rogue, four levels of monk, as I was bringing in a level 7 character.
Now, the characterization: I must admit, that I did a sort of cliche thing with Ann being a rogue up until she met a monk and decided that she could leave a life avoiding the law behind if it meant being this man's student. But... all of the monks in this area are either evil (the Scarlet Brotherhood) or human devotees of a human deity from a specific racial group (Zuoken). So.. that leads to some interesting questions. What does a small nimble halfling think when she's being trained alongside people who can hit harder and move faster than she can simply because they were born human? It might lead to... certain feelings of inadequacy, mightn't it? So, the concept was born, and Ann started using a lot of devices and other artifice to support herself, all because she felt inadequate. And in recent times, that feeling of inadequacy crept up on her, and became a very dangerous consuming urge to acquire power. Because another part of Ann's nature (I decided) is her essential goodness, this was a big problem, and it ended up being resolved with her nearly (well, okay, completely) cracking under the strain--starting fights she shouldn't have either because of fear (an UNDEAD dragon? sneak attacks won't work--it can grab her trivially) or because of desire (Oh! That Scarlet Brotherhood monk has a staff--it must be very powerful!). She eventually came to one of the other party members for help, and is now on the road to recovery, after renouncing all material possessions.
Anyway, you can see how even such a minor thing as the difference in size between humans and halflings can be grown into a great seed for a story. I have to admit that I really *like* the racial cultures in Eberron, but at the same time, the genericness of the 3E halfling was very suitable in this case. (And would have been even in Eberron, since cultures are very much intermingled in those who are born in the great cities.)
And I guess that's the thing that irritates me about the racial culture stuff--I think it works much better when presented (although players should be able to do this on their own) as the *predominant* culture. In any seriously cosmopolitan city, if your world has them, you're going to have folks who simply assimilate the common culture, or who draw apart (ghettos, halfling-town, elf-town, the Easterners' quarter, whatever.) In a world like Greyhawk, where the lines are drawn more tightly, and non-human races are less common, flexibility as good.
(Kind of like how planets that have a single world-covering ecosphere are out of vogue in SF writing these days--they don't make sense. Races don't create a monoculture--they may create a shared cultural heritage, but culture is much more than that, and much more interesting than that. Even Tolkien's elves had serious cultural differences between the Noldorin and the Sindarin. And a simple division of races into "these are the high elves they like building stone fortresses and kicking butt" and "these are the gray elves they like building in trees and hiding a lot" is so trivial as to be lame, and doesn't do justice to Tolkien--who was a man who *really* understood about how culture and race and language and history all get tied up together.)
P.S. For god's sake, the next halfling or gnome who's really a kender that I see is *so* going to get kicked from one end of town to the other. Sometimes, stereotypes are just stupid. And I have to admit, the concept of an entire race that is somehow super extraordinarily lucky even though they act like kleptomaniac eight year olds is UTTERLY BEYOND ME.