I've always had a soft spot for gnolls, though have never had the chance to play one. There was a brief phase in (I think) the 90s when, in the absence of half-orcs in the PHB, it looked like gnolls were being set up to be a new 'monster' PC race that didn't have all the baggage of orcs or goblinoids. David Cook wrote a novel to that effect I think - Soldiers of Ice. One of the better earlyish FR reads.
But with the reintroduction of half-orcs and de-monsterising of orcs etc in general, I think WotC wanted an unambiguously evil humanoid race for PCs to kill without complicated morality questions arising. So they got their very sad lore retcon in 4th ed, and the rest was history. Midgard's gnolls are still pretty great though, I'd love to play one in that setting.