What Talad said at the Dev Q&A meeting was that Xacha will be going away, Diaboli will be put on the shelf for a while , ie not be available as a player run character for a while but will be brought back at a later time. Dwarves will also be merged into a single race.
Talad said at the meeting currently there is the need for 23 separate models with the 12 races we have, since Kran is a single gender. This takes a lot of work to support things like robes, bracers, armor, eventually clothing for all the races and right now the number of artists available just can't support that many different models at this time