I could also see a new variant of elves: marsh elves. Highlands and places like that may not be completely flooded, just to the point where, say, the ground is just under a half-foot of water or so. Great trees would still grow, letting the elves still live without being on the seas. And, for that matter, elves could make floating islands of plantlife, and they could also make floating islands of mud and dirt- ever heard of the native Mexicans, ah, Aztecs, were they? They had floating farms. 

Being a shapeshifter would be cool in this environment