The only alternative would be Bosmer? I would rather be around goblins all the time.
The biggest difference between goblins and Bosmer is that the goblins are less annoying. Oh, and you can get a bounty for killing the Bosmer, while it's entirely permissable to "shut up" the goblins with a weapon.
Having the game take place in a border region, with a mix of several man and mer groups and at least 2 or 3 sub-species of Argonians or Kajiit, would give you a lot of character options, as opposed to doing a game set IN either Elsweyr, Black Marsh, or Valenwood. I suspect that having a game with MOSTLY either Kajiit or Argonians would be absolute bliss for about 20% of the players, "acceptable" to around half, and hated with a passion by the remaining 30%. Giving everyone the chance to limit their exposure to one "hated" group or another might put a major dent in that 30%. Bethesda is probably going to "play it safe", with something that nobody finds objectionable, rather than go with something that a fraction of the marketbase finds particularly attractive while others can't stand. It's not what I'd like, but it's probably what will happen.