The characters may look oddly-proportioned and ugly during the creation phase, but once you actually start the game, I think they look good, for the most part. The only really bad ones, IMO, are the dwarves. They look like weak and child-like rather than hardy and strong like they're supposed to.
You guys gotta remember this isn't an MMO - I don't think you should expect things like height/weight sliders and a bazillion different eyes, noses, etc. Especially since you can barely even see those details in-game.