I've always liked substancial racial bonuses in games. I played EQ a ton and the racial bonuses there were initially HUGE (DEs had awesome night vision, ogres were immune to stun, trolls had regen, etc.) and it made the races (and indirectly, the world) feel distinct and tangible. If you wanted to MIN/MAX your warrior you didn't chose a DE, which made DE warriors sort of rare (and noteworthy).

I do believe there is a financial component involved here though--as mentioned in a previous post, many people want to be whatever race and class they want, and don't want to feel penalized if their lalafel warrior has fewer HPs than a race that is 5 times larger. I suspect flattening racial "in game" bonuses and allowing people to be whatever race/class they want may mean more subscribers, which means more money over the life of the game.