I'm generally in favor of more importance being given to race choice. I feel like race should be a feature that is suffused throughout the entire play experience of a character and not just a thin-veneer manifested as a lone power or stat bonus.
Acceptable? Or a deal breaker?
races should not modify ability scores.
Dwarves suck at arcane magic. Haflings make for poor fighters. This is what I call an implied setting, and D&D was developed with one in mind from day one, I believe.
As a DM, you're free to change the implied setting, but that's a big part of what makes D&D being, well... D&D. It was one of the major reasons keeping me away from 4E; the amount of offense to what came before (eladrin? new cosmology? evil paladins?).
That said, the implied setting deserves mechanical support. You can easily house rule racial differences out of your game, if you want to. Creating different races out of nowhere is not that simple.
Cheers,

(Dungeons & Dragons)
Rulebook featuring "high magic" options, including a host of new spells.