Because I like CRPGs.
Not completely restrictive. I mean Jade Empire is very restrictive but Fallout wasn't with the various armors, and the BG games you had various armors and colors to choose from as well as voice sets. NWN was very adaptable how one can look like, especially through the use of craft skills. Sure there are restrictions and CRPGs won't ever be completely open but that doesn't mean they should remove the option all together.
Not completely but the more options you can give the player in the form of character development and appearance the better. Such as I felt my character in the NWN expansions was actually my character moreso than the Nameless One in PS:T no matter how I played him. Sure there might be some limitations, for it is a CRPG, but as long as those limitations don't interfere how I design my character I am okay with them. Such as being the Bhaalspawn had no real effect on me making a Halfling FIghter Thief or an Elven Necromancer, but in PS:T I was always the Nameless One with no choice of race, gender, or what not. Sure the Bhaalspawn background is forced but the overall freedom of gameplay is not hampered like being forced to play the Nameless One.