I think Niaras approach is very good. Halflings should not just be scales down humans or elves. Heads should look a tad bigger etc. Even if it's just a fantasy, Brains need space to work properly . Going at it from an evolutionary standpoint, you would need to think a bit about which parts of the body need to be strenghtened or weakened to make them a healthy Species.
Take the other direction: Giants. If you would just scale a human up to, lets say 10 meters, it would look like a human but could not stand, let alone move. Head would be too heavy etc.
Same goes for the small direction.
If i read my forgotten realms correctly, halflings are agile and dextrous. With the acutal ingame bodies, movement liek that would not really work out. Without wanting to discrimininate or belittle anyone, if you look at our real life small folk (forgot the english term) and how they move, it is different from the standard human.
Nature designs bodies of beings generally for their purpose. So i am all for changing halflings to a more "realistic" (nice term for a fictive race) bodyform.
I think the Kender race from the Dragonlance setting has that. I think they are the substitute for Halflings there. Cannot remember if they have those too.
Apart from all that: We need more bodyforms for all races :P
. Going at it from an evolutionary standpoint, you would need to think a bit about which parts of the body need to be strenghtened or weakened to make them a healthy 
