I love Gnomes. Here's how I view the races.
Humans, ubiquitous. I keep them because they're the baseline that make my storytelling work.
Elves, false nobility. To man, they represent something higher to yearn for, or perhaps a threat to destroy out of jealousy. This veneer is false, as they're as flawed as we are. Also, with their long lives, they give me the freedom to create marvelously complex societies, that would almost never work with humans. Ancient memories, great.
Orcs represent our savage side. I play them so that they're almost as civilized as humans, but the vicious racism all other cultures hold against them is useful for certain types of storytelling. I don't make them evil, but people think they are.
Dwarves just make stuff. They're humans who live a long time, without the magic of Elves. So I don't want Dwarves; they're stale to me. Dwarves are much less interesting than humans, because they are so stereotyped. Boring.
Halflings and Gnomes I mostly combine into one race. They're interesting because of their unique outlook. Like fey, they don't have any serious concerns of their own. However, they are mortal enough that they can sympathize with humans and Elves and such. As villains, their maliciousness is far more cruel than that of pure fey, or simple monsters, and their whimsy often makes such villainy all the more frightening. As heroes, they can represent the everyman, since they rarely aspire to heroism on their own. They live life like an art, more intensely yet more subdued than other races. I love them. If you notice, there've been Gnomes on the on the covers of both Wild Spellcraft and Four-Color to Fantasy.