I haven't noticed them anywhere yet, but I like the idea. I've always considered dwarves as the most advanced of the fantasy races. I imagine them something like this: http://images.wikia.com/dragonage/images/archive/f/f9/20110121223720!Varric_concept_art.jpg What do you think, would they belong in a Steampunk world?
My world.. hmm, that's the thing. I've been playing around with the idea of Europe in 18-19th century, which would also include mythical creatures. I would try and make European environment with some of its historical characters and events, but also add certain mythical beings and different technology by my choice. You could say I'd change the history of Europe in a little absurd way.
There's no limits right? I've already created a different history, dating back to Antique, so I think it should be fun, mixing different mythologies and culture into one continent. Napoleonic wars might be interesting with dwarves and different technology. I just wanted to hear your opinions, since I'm quite new to the writing world.
"Napoleonic wars might be interesting with dwarves" - it would certainly have been shorter ... Not sure of the martial advantages of using dwarves in an army without it descending into low farce. Possibly a powerful or influential dwarvish subculture that was a hidden power behind much of the politics and other seats of power of the time. Perhaps Napoleon was a member of this cabal specially bred for height as part of a breeding programme over many generations.
Use them! It's always interesting to see steampunk versions of mythical races. Depending on how serious you want it, you may want to limit the number to elves, dwarves, humans of course, and maybe orcs.
Put dwarves, elves, orcs, gnomes, fairies, wizards, ghosts, demons, and pretty much anything you can think of, and make a steampunk version of each race.
I haven't seen any novels that contain gnomes as an established race. Gnomes are often in games, but I've never personally seen them in any literature I've read.
Not exactly steampunk but The Iron Dragons Daughter by Michael Swanwick put fantasy races in a slightly futuristic tale. One of my favorite books actually. He did it in such a way that he didn't have to turn to humor. The feel of the book is very serious all of the way through, I suggest giving it a read for some inspiration.
You seriously haven't noticed steampunk themes with dwarves? The Elder Scrolls series is lousy with it, though they call the dwarves "Dwemer" in that one. Also, Warcraft has had steampunk dwarves in it since its second iteration back in the 90's, and it's only gone on stronger. Dwarves and Goblins have become the go-to for steampunk fantasy races.