As it currently stands, Elf is quite possibly the worst race in the game.
From a melee standpoint, they are both squisher than any other race and also deal the least amount of damage. +2 to-hit/damage on Rapiers/Scimitars or +2 to-hit/+4 damage on Falchions is not enough to make up for the +4 to-hit/+8 Sneak Attack damage on Halfings, the Power Attack bonuses of Warforged or Half-Orc, or even the Sneak Attack of Half Elves or bonuses to stats and free feat of the Human. In addition, they are some 20 to 80 hitpoints behind the other races.
From an arcane standpoint, the -2 CON hurts quite a lot on classes that only gain 4 HP base per level, and there is absolutely no benefit to roll an Elf Wizard or Elf Sorcerer, as the extra SP and reduced ASF are both completely laughable.
And finally, from a divine standpoint, with the introduction of Half Elves and the Rogue racial feat, the reason to roll a melee divine is lessened even further. Why would someone roll Elf when Half Elf would net them at least 20 more HP, and 10.5 Sneak Attack damage far outweighs +2 damage on scimitars?
Because of these things, rolling an Elf is little more than a "flavour" choice, with no real good reason outside of that for a player to choose Elf. This, therefore, is a call to the devs to take a fresh look at Elves (and Drow as they suffer many of the same issues) and rebalance them to fit into the current incarnation of DDO. This is NOT a call to nerf any race in any way, shape or form, and mentions of other races are merely to show how the comparison to Elves would change. My goal is not to make Elves the new "overpowered" race, but simply to bring them up from "only as an RP choice" to "viable".
One possibility would be add stacking seeker bonuses to the racial weapon enhancements for Elves, Drow and Dwarves. 2 on the first tier and 3 on the second (for a total of +5) would not overpower Elves, Drow or Dwarves, but it would give more of a reason to play these races and use their racial weapons, instead of switching in every case to Khopesh. Half Orcs would be excluded from this because Half Orcs are already amazingly powerful, and the three aforementioned races receive specialized training in the weapons they use while Half Orcs just learn how to hit things very, very hard.
Compared to a Halfling who is also using a Rapier/Scimitar shows that Halflings would still do more DPS at less than 25% mob Fortification, and Elves would do more damage at greater than that. (The current situation is that Elves do not do more damage than Halflings until 60% mob Fortification).
Compared to a Warforged using a Rapier/Scimitar, and Elf would do more damage at less than 60% Fort, but the Warforged would do more damage at greater than 60% Fort. Please note also that the Warforged has many benefits that would far outweight this, including +80 HP, immunities (especially to negative levels), and that the Power Attack enhancements also work for the best weapon in the game; Khopesh.
Comparison to a Half Orc using a Rapier/Scimitar, would, of course still yield the Half Orc having greater DPS at all levels of Fortification (that +4 STR is hard to beat).
And finally, comparison to a Half Elf getting racial sneak attack shows that a Half Elf would deal more damage at less than 70% Fort, but this is dependent on the neither race being a Rogue.
In regards to arcane casters, it is easy to see that lowering ASF is, quite simply, a joke. If Elves are meant to be viable as arcane casters (as the compendium suggests by listing Wizard as their favoured class) then Elves need something to give them an edge over the much tougher Humans and Warforged, and over the smarter and more charismatic Drow. +60 SP just isn't going to cut it here. Perhaps changing the Elven Arcanum line to also grant a racial bonus to a certain spell school (up to +2) would be acceptable. Compared to a Drow, the Elf would now have 1 higher DC in that school, but be 1 DC behind in every other school. Perhaps this could also be available to Elves who are Clerics and Favoured Souls as well as Wizards and Sorcerers.
Any further suggestions (or improvements on the ones I have made) would be greatly appreciated.
EDIT: I'm reposting some of the suggestions made into the OP (with proper credit given) so that they're more visible to any devs that might read this.
k1ngp1n:
1. Change the amount of SP gained from Elven Arcanum from 15 SP to 50 SP per enhancement.
2. Bump the damage for racial weapons of Dwarves, Elves and Drow to +3 damage for one-handed weapons, and +6 for two-handed weapons.
grodon9999, sirgog, and myself:
1. Bonuses to AC while wielding only racial weapons (more complete explanation here).
QuantumFX:
1. Allow Elven Monks with WSS to use Scimitars and remain centered.
2. Introduce Elven "heritage" lines (more information here).
3. Tie the Seeker bonuses to the Attack lines for melee weapons, to make them more attractive.
Torebro:
1. Add Elven Haste Boost enhancements (won't stack with class Haste Boost, more info here.
2. Let Elven wizards add +2 INT through enhancements that stack with Wizard INT enhancements.
voodoogroves:
1. Add a new racial PrE that counts as Wizard and boosts melee effectiveness (as in Spellsword or Eldritch Knight).
Crann:
1. Let Elves choose to use their DEX mod instead of their STR mod for Tactical feats like Trip and Stunning Blow.
Gorbadoc:
1. Increase the bonus of Elven Arcanum, and allow all Elves to benefit from it, with Wizards benefiting more. (More info here).
Wrendd:
1. Give Elves both non-stacking Insight and stacking untyped benefits to AC while only holding racial weapons. (More info here).