Human, as players handbook
Dwarves; Dwarves of the region have been aboveground so long that they have lost their darkvision. They have kept low light vision however. These dwarves are hardier than typical dwarves however, and gain a racial +1 bonus to their strength score. Dwarven and Human society over the past 500 years has become one single entity. Ratio of Humans to dwarves is 7:4 currently. No racial prejudices against dwarves exist, and most establishments are equipped to serve either Human or Dwarven clientel. Dwarven is no longer a current language, as common has amalgamated it.
Behind the Scenes: The Human and Dwarven populations are currently one. The Dwarven spirit however is not lost in this however, they have just completely allied themselves with humans so much that the cultures have blended. This allows many role playing opportunities for the ressurgance of the dwarves in one form or another. When the humans are in trouble a dwarven brigade may come to the rescue. It is up to the DM to decide how this plays out.
Elves; Elves have only quite recently domesticated. As such, they no longer are profficient with longswords. Instead, Elves have weapon focus in both spear and club as bonus feats. An elf's favored class is now Ranger. Only Elves may be Barbarians.
Behind the scenes: This Game presents a rare opportunity for Elves. The Elves of this world are tribal. While they have a connection with nature that is deep and spiritual, they are tough. They won't take the time for mourning their dead, celebrating or even loving too deeply. Their concern for too long has been pure survival. This has made them gruff and hardened. The Elf in my game smashed her way through the burned body of a spider that blocked the tunnel with a cudgel. It was perfect.
Half-Dwarf; The half Dwarf is a Human with Dwarven blood. His Dwarven bloodline gives the Half-Dwarf Several distinct advantages.
Behind the Scenes: Every party should have at least one half Dwarf. I varied them from the Mul of Darksun so that they showed more of their human side. The Half-Dwarf is the perfect party member and makes an excellent Bard or Rogue. They can act as a go between for any of the races, and fit in everywhere.
Half-Elves; As players handbook
Behind the Scenes: This was an oversight on my part that fortunately none of my players picked up on. If Elves had only been in town for 5 years, how could any of them and humans have conceived offspring. I don't recommend using Half-Elves unless you accelerate the timeline so that Elves have been in the village for longer than 5 years.