I think from a general standpoint, dwarves aren't played as frequently because there's not an obvious subplot/characterization hook built into the species. They are not conventionally attractive due to their smaller size and the jokes about even the females being bearded - for those hoping to pursue a romantic subplot, it can be difficult to find a partner - nor are they particularly oppressed - an orc character, for instance, can bemoan the slaughter of their race, or an elf mourn for the forest.

From a 3.5e D&D standpoint, I just like the charisma-based classes and dwarves get a -2 penalty in that stat, so I don't play dwarves at this point. Otherwise, mechanically speaking, they seem quite good and can't speak for others. I guess maybe classes like orcs seem more intimidating and powerful.

That said, you really can't please everyone, unfortunately, so you probably shouldn't worry about it too much. Maybe consider subplot hooks related to the race? I'm just guessing though.