Punkoinyc: Your character looks cool enough, he just doesn't look like a gnome. When I think of gnomes I think of, garden gnomes, David the Gnome, Rien Poortvliet's paintings of gnomes.
In all honesty, I always hated that depiction of gnomes. XD They look like miniature dwarves to me and don't seem to occupy much of a proper niche in fantasy. You already have dwarves and halflings for short races, no real need for gnomes into the mix as well.
mathaetaes: Aside from their inverted-peanut-shaped heads, you can make your gnomes look like whatever you want. The only thing I see missing is the pointy hat, which I suppose is a pretty big oversight in NPC gnomes, but could be justified by the fact that we're in baldur's gate, where fashion is different than some predominantly gnome area. That same fashion situation could also cause gnomes to change their hair and beard situations to better fit in, as is pretty common when an outside or minority group lives among a dominant culture.
Unless the beards and pointy hats have significant religious or cultural meaning, it doesn't seem unreasonable that gnomes would abandon them.
Beardless dwarves, however, strike me as odd (e.g., Balen).... but maybe D&D dwarves don't have the same cultural attachment to beards that LOTR dwarves do.
In earlier editions having a properly groomed (but short) beard was considered fashionable for gnome males, but they don't have the same sort of cultural attachment to beards as dwarves do. Traditionally, the only thing that would make a dwarf shave his beard is as a symbol of shame (they may be an outcast, a criminal etc.) That said, centuries have passed and there is now a sizeable population of dwarves that were born on the surface and have never known their traditional subterranean/mountain homelands. It makes sense to me that these dwarves would go on to develop their own culture and not have the same reverence for beards as their ancestors do.