Blizzard have seemingly made it clear that they don't want to bring real-world sexuality into the game; a response from them over this issue has said "We have determined that advertising sexual orientation is not appropriate for the high fantasy setting of the World of Warcraft and is therefore not permitted". Further justification for the charge was that positive discrimination would offend the majority of players. However, this makes little sense seeing as the guild was not exclusive, merely GLBT-friendly.
To what extent do our in-game selves leave real-world attributes such as sexuality at the door? If I want to roleplay a lesbian dwarf, I would like to do so without being silenced by Blizzard. However, on the flip side of the coin, I don't want to be discriminated against in-game for my gender or sexuality--that's what Xbox Live is for. It's a tough line to draw, and GMs deal with it every day, but perhaps they overstepped the line this time.