We don't know how strong the differences will be, though we can probably assume that elves will differ more from Imperials or Nords than say Bretons, orcs, even more so, and Khajiit and Argonians... that goes without saying. Given what we've heard on the races so far, I think we can expect fairly noticable differences even in different human races, but how major these will be I can't be sure. I highly doubt all races will have unique body models, but I really hope at least Khajiit and Argonians do, being exactly like humans except for fur textures or scales, having a tail, and different shaped heads just isn't quite enough, at the very least, they NEED to have claws again. That and making it so that you can tell Bretons and Imperials apart without needing to first hear them speak should be Bethesda's first priority when it comes to improving racial diversity from Oblivion (I won't go on about making the models actually look better as the images we've seen show they've already succeeded there.)
And yes, basically everyone in Oblivion looked unattracrive, but you really think Elves are worse than this? http://cache.kotaku....mazoga_001_.jpg
I'd say so, since orcs are supposed to be ugly, that's the way they are, I'd be disturbed if orcs looked
pretty. Elves on the other hand have traditionally been said to be beautiful in fantasy, and while the Elder Scrolls can certainly break from that trend if Bethesda wants, I've never seen any lore saying that elves are intended to be ugly.