'Racist against Goblins', haha :)
I don't think it's necessary to have complete balance where every race has equal potential to others, rather I hope they fit the general fantasy profile for themselves. I think this game goes out of its way to give Goblins the sexual potential you mention, making them useful in a way that doesn't exist in say Dungeons and Dragons, where Goblins are just weaker in all ways than an Orc, or a Human.
That said, I think of Goblins as useful rogue/thieves for the party and I will use the Slave Market to upgrade a Goblin as necessary to fill that role. 'Extra' Goblins are useful to fulfill Servant Guild requests for slaves with Charm or Sexual skill (or just Tame or Timid).
Basically, I think the game is doing a pretty good job of getting the races thematically correct, and the main improvement I would make is an appropriate custom class for each race that doesn't have one (or shared between races like Druid).