I'm amazed no one's mentioned anything about the gnomes from DAWNFORGE. Not only do they gain the fey creature type as they progress, but they have the tendency to phase in and out of the material plane due to their connection to the fairy realm (or something like that; can't remember exactly). While all the races in dawnforge were pretty powerful (I love DF races, even if they're not exactly "balanced"), there was something special about the gnomes, what with their ability to cast illusions, go invisible, and such. Plus, the idea of a race of what are basically pacifists is kinda neat.
I've played a few gnomes, and I'm alright with the race (though I prefer halfling). I generally find that people play gnomes if they're a "Class clown" type player - they're a great race for getting laughs at the table. And, despite what some people might think, that's a perfectly valid game explanation for a race - the game exists to have fun, after all.
A lot of the features of the gnome are used for comedic effect, which is why I think Dragonlance gnomes are repeatedly mentioned here - the designers knew what the strengths of the gnome were, and played upon them.
My own times playing a gnome pretty much reinforce this. In 2e, I played a gnomish fighter who specialized in the heavy crossbow (a weapon he had "modified" rather heavily). Problem was, he was very shortsighted, thanks to years poring over his blueprints for his crosssbow design. In combat, I'd ready actions against bushes ("the second that green blur over there moves, I'm blasting it!"). It wasn't a very serious campaign, and the group loved the character, even if I really didn't do a whole lot (I was also the assistant DM, so I didn't want to steal the spotlight).
My brother played a gnomish hexblade a year or so ago that was pretty damn creepy, and I think he got that effect because people take one look at gnomes and think "likable and good" - so that when his evil character came across, he was REALLY playing against type. (I got a similar effect when I played a halfling druid with a temper).
So, yeah, they're an alright race, although in my experience, they're often the first race that gets written out of a campaign world.