We (the players) always expect a betrayal from one of the npc´s sooner ore later. It is never wise to trust a gnome in any of my gm´s games they are always seedy and evil.
In my game, they're called Hobbits (and yes, I understand the legal reasons that they are officially called Halflings in the rule books). "Halfling" is generally considered an insulting name to Hobbits.
Hobbits usually have a home country, similar to the Shire from LotR.
There is usually a hobbit in a position of power named "Folco" after my favorite character (a 1st ed. thief).
