I respectfully disagree. While some of the gnomes racial abilities seemed arbitrary, such as the attack bonus against kobolds, I think the race has plenty of flavor and definition. To me, elves seem just as arbitrary. Sense secret doors? What kind of racial ability is that? In many ways, elves are simply better-than-humans. That's how tolkein created them. They're fairer, more graceful, wiser, longer lived, more magical, etc etc etc. Oh, and they have pointy ears.
Gnomes have always seemed to me as alot more than just "another small race." If anything, I see halflings as the race that just doesn't seem to belong. They're just small humans. First they're hobits, then they're mini gypsies, now they're riverboaters. If any race is struggling to find an identity, it's the halflings.
Gnomes, on the other hand, are an iconic fantasy race. They are closely tied to fey, much as, if not moreso, than elves. They are curious, inventive and clever. Their mastery of illusions stems not only from their fey heritage and magical talent, but also from their ingenuity and imagination. Gnomes are the classical elves or fairies. Mischievious, mystical, and elusive. They make up for their small size and physical weakness with cunning and magic.
I just don't see why people think they aren't well defined. They just needed a little polish, that's all. In World of Warcraft, they are a very popular race. I think alot of a race's popularity has to do with how they are presented.