My new world

I like your idea for races, and here are some of my suggestions:

#1) I think you should use the goblin idea, and I like the caste idea too... I think you should definetely make some varied races though (in both look and in-game stats) to give players diversity.
#2) I also like the dino riders. I have two suggestions as far as their race goes. First, you could make them be a race of semi-supernatural spirit people, much like the kalashtar in the Eberron Dungeons and Dragons Campaign Setting. They could also perhaps bond with the primeval spirit of the dinosaurs, which allows them to ride them. Second, they could be partially dinosauroid themselves, which could also be used to explain their dinosaur riding.
#3) I also like the role-reversal of elves being antagonists while the goblins, etc. are the "good guys". However, I think that you could take the idea a step further and also have evil fairies, leprechauns, pixies, etc. Don't take it too far and let it get cluttered, though...
#4) It would be cool to have some kind of supernatural creture, mybe an elemental/demonic race of some kind. I'm not sure how you want the other planes it, though...
#5) I think you should have a race of traders, possibly opperating out of skyships... though I don't know, maybe these would just be more goblins.

That's all for now, but I'm sure I'll have more ideas later! Great Game Setting, though!

If I was sitting in on that conversation I would have brought up a number of things.

1. You should find some way to simplify races, maybe have only four, the Urban Grems (I imagine them like the goblins in that Jim Henson Company movie, Labyrinth), the Stony Ettins, the Sky Elfars, and the Viscous Jennahs.
2. Then go ahead and add diversity to each race. Grems have castes, Cobblers, Trollers, Tinkers, Caulkers, etc. (assuming most PCs will be grems and that some players will want to play attractive characters, you can have Liar Caste Grems who would be the grem aristocracy and they would be hot like David Bowie.) Ettins have houses, House Diamondtooth, House Steelhammer, etc. Elfars have philosophical schools, anemos (pirates and rainders), polemos (warlords), nosos (plague elves, sky ships accompanied by putrid clouds), etc. Jennah have totems, Eagle, Wolf, Velociraptor, etc. so they can call on the powers of the wild to help them survive the swarms of dangerous insects and carnivorous plants. (I don't know how you do that with standard d20, but it's super easy to set up in True 20.)
3. If you're going to have cities at the top of mountains, then you absolutely have to have sentient carnivorous plants that constantly ring the stone cities of the ettin lords, kind of like a constant siege that the ettins beat back with greek fire so they can receive sky ships and trade their mineral wealth for food.
4. Incidentally, what do they eat? The grems, ettins, elfar, jennahs, what do they eat? I assume the jennahs would be hunter-gatherers. The grems could eat what the behemoths eat, kind of like how in Africa the termite mounds are so huge that in the spring when they swarm, you can catch them in wicker baskets and roast them over a fire. I've never been to central Africa but I hear they mush up the roast termites and eat it like peanut butter. I think also they could send flying skiffs down to pick fruit as their cities passed areas where it was in season, and they could fish when their cities were near water, as long as they were careful to avoid getting eaten by bugs or plants. Oooh, there should be seed pods that float high in the air that can be harvested, like hydrogen filled melons and pumpkins, and... I'm tapped for now, but I like the idea that their staple food might be sky-shrimp and flying breadfruit stew.
5. Maybe the cities on the aquatic whale-bulletes don't have to be built into the whale-bullete's shell or inside the creature like Jonah and the whale. Real whales tend to accumulate barnacles and limpets. Assuming the behemoths live tremendously long, it might be normal for them to accumulate thick accretions of generations of giant barnacles and limpets, some as big as elephants. These might trap air when the behemoth comes up to take air, and the settler grems might even be able to expand upon these natural chambers by cementing giant seashells onto them.
6. Gathering materials to make cities would be a hell of a job, I mean getting stuff up to the back of a behemoth would be horrendous. Although cement wouldn't be too hard, and cement was invented by the Romans, and nowadays we even have marine cement that will cure entirely submerged in water. Perhaps most of it would just be magic. If you use the Chinese pattern of 5 elements (wood, metal, stone, fire, water), you could get away with elementals just being able to conjure structures or at least materials out of nothing. But a cool adventure might entail a city noticing a grove of special trees and sending out foresters to harvest some. Sky ships pull up and drop smoke bombs to confuse any dangerous bugs that might want to attack and then Troller caste grems drop down on lines in thick behema leather armor (pulled from the behemoth's natural calluses), covered in enough steel plates to roll up like an armadillo because the trees need to be cut quickly before the pitchers come, intelligent plants with grasping tendrils that love to throw grems in their pitchers full of digestive acids. Oooh, the pitchers also have debased jennah tribes, who've abandoned their ancestral totems. You can tell them because normal jennah adults have patterns of ritual scars, but the one's seduced to the service of the carnivorous plants would have their scars infected with bits of grass and algae to show their allegiance to their plant lords. So armored Trollers with huge swords, like Chinese woodcutter swords, or hedge clipper claws, would fight off these dino-riding dred-headed berserkers and their man-eating plant masters while other grems would quickly cut trees and pull them into the sky, to safety.
7. Sea-dwelling grems would face similar dangers as their cities swam past valuable kelp beds that might also harbor dangerous fish, aquatic monsters and carnivorous varieties of water plants.
8. Since it's a fantasy setting it might be cool to have dragons. They could be according to the 5 elements, stone, metal, wood, water, and fire. Ooooh, wood dragons might be dangerous, untrustworthy allies against carnivorous plants, if the venus trap collective has angered a local wood dragon.
9. You know, it might be nice if the sky ships aren't just made out of special wood, but the wood also needs to be treated with special oil that only comes from flying whales. And it used to be that the flying whale populations were stable or even growing in places, and the grems never hunted them overmuch but then the Elfars came from another plane specifically for this oil from these flying whales which leads to a lot of conflicts over what is now seen as a dwindling resource.

OK, that was a lot. Feel no compulsion to use any of it.

You have to have some sort of awesome reason that the people mostly live on these behemoths. Maybe terrible predatory dinosaurs, maybe ubiquitous dangerous plants, maybe some atmospheric condition on the ground but not on the behemoths' backs. Oh here's a nasty one, carnivorous mites, get inside you, eat you up, live in grass and dirt. Dino-riders live in stilt houses, walk using stilts or those tall Japanese sandals.

And figure out more about the behemoths. Do they travel in herds? What do they need to survive? I think they have very slow life cycles, and they are filter feeders, eating swarms of flying insects that erupt from the landscape at different places in different seasons, which is why they move around so much.

Oooh, how do they mate? Maybe you can only build cities on the backs of the males, otherwise... well, you know. Maybe they live in pods, with one male and a few females. Maybe some cool adventures surrounding a behemoth getting old, and the people living on it have been there so long they forgot what their ancestors did to found this city when the last behemoth died.

If I think of more I'll comment more.