...Not sure. It's awesome to have advantages and disadvantages between races, but at the same time I'd rather have the option than not. It would be cool if there were argonian exclusive helmets and boots.
I like the idea of distinct advantages and disadvantages among the various races. However, I think the animal races are smart enough to make armor that fits for them. Technically, a wood elf might have problems trying to find a nice set of children's orcish armor to don. If we have to start checking the sizing, dry-cleaning, and care instructions of each piece of armor we find I think this will add a layer of confusion, aggravation, and time drag with little appreciable payoff in gameplay realism.
I do think the distinctions among the races should be more profound than adjusting a few starting statistics five to ten points in one way or another. Bonuses for hand-to-hand should be more than that for the beast races. Talons or needle-like claws should have some degree of armor-piercing or armor-ignoring qualities. Theoretically, an argonian could stab someone's eyes out 'three stooges-style' right through the view port of a full-face helmet. However, if a beast chooses to wear boots and gauntlets all positive multipliers should be negated. This way beasts can choose superior h-2-h with armor limitations or a more 'human' style of combat.