I definately side with the more options = less flavour.
My players think the opposite. And then they wonder why when they all play Australians (But not those Tasmanians, can't stand them) in a Godlike game, their characters are different and interesting. They actually care about their teammates and stay the hell out of dangerous situations.
(It probably helps that despite superpowers, two rolled tens from a rifle can kill instantly.)
And when they play a half-dragon cleric/wizard, an Aasimar paladin, and some form of spiked demon thing, their interactions towards one another are rather boring and trite. The paladin goes out of his way to sacrifice himself for a cause, the half-dragon can't be beat and wanders off by himself. Despite a plot they all agree is cool and interesting, their own lack of interest in their characters is what dooms the campaign. Then they come back as humans and enjoy themselves.
I think options are interesting. But I think they actively work against character interest. Now, I enjoy a lack of class restriction in 3e. That is good. And it's quite interesting.
Hmm. I think every campaign should be restricted, simply because it creates characters and not half-hearted humanised archetypes with extra bits.
To go back to my Godlike game, as an example. We all played Aussies, which was good. Every character had his thing and a nice bit of story to share with the others. Letters from home and stuff were good.
Now, a few characters died. This is fair enough. But the main problem was the fact I allowed other allied Talents in. We then had a few brits. Oddly, they were all tea-drinking accented types. I couldn't distinguish between their personality. Players didn't make a british character, they made a british soldier archetype. I had three of exactly the same archetype.
With that in mind, the Australian characters became more archetypical. More "Crikey", "G'Day", and so on were to be seen.
even from the limp wristed sydney radioman who would never have said "Crikey" in his life.
So anyway, IMHO, restriction breeds roleplaying more than options, which tend to polarise what characters you have and turn everything into an archetype.