Well, not all fantasy settings have to have dwarfs and elves. There are many races that you can choose from SV. Personally I like RPs that lets the player have a say in race so in my opinion go with different races. Most fantasy settings I know of have Lizardmen, Drow, Fairies, Nymphs, Griffons, Dragons, Beast men, kobolds, etc.
... yeah, I play a lot of D&D. But still, if you allow players the option of choosing a different race it just give them the ability to make a more unique character. I've always found it a bit weird that most D&D parties are all humans, or all elves, or just stick to the main races. In that diverse a world I would expect at least one of the players to choose a non standard race. My first DM actually encouraged us to choose different races since it would actually change things up from the standard Every hero was a human, is a human, and will always be a human.