In ranking all of the possible hunter races, I'll be splitting this discussion into Horde and Alliance sections. Within each section, I'll list the races from those best suited to hunters to those worst (though the clump in the bottom tend to mostly be all equally non-beneficial). I'm ranking the racials based on how much they'll help your raid kill bosses -- not on PvP merit, not purely on your own DPS, but overall raid effectiveness.
It's also worth noting that we're not going to list every single racial ability of each race, only the ones that are going to give us an advantage in boss fights.
We'll start with the Alliance, not out of any favoritism but only because the Horde are stinky and ugly. The Alliance are delightful in every way, except possibly for the non-dwarven races.
Worgen Worgen have two incredibly awesome racials that make worgen by far the clear winner for Alliance hunter racials. These are Viciousness and Darkflight.
The 1% crit gained from Viciousness is a fantastic DPS gain across the board for hunters, and unlike the dwarf ability, worgen gain this regardless of what weapon they're using. No other Alliance racial can top the DPS gained from Viciousness.
Added to this killer DPS gain is Darkflight -- which is absolutely a phenomenal raiding ability. In fact, that burst of speed on demand is so powerful that some of the hunters from top progression guilds we've interviewed on the Hunting Party Podcast told us their guilds were considering moving all of their members to worgen just because of Darkflight.
Draenei Space goats come in #2 on the Alliance end, with Heroic Presence and Gift of the Naaru.
For the most part, we don't care a lot about the heal, though it can occasionally be useful -- but the extra 1% hit is darned near as good as the worgen's 1% crit. After all, if you end up over on hit rating, that just means you can reforge a bunch of that hit away. It's not quite as good as 1% crit, since you will sometimes have too much hit and you can't always reforge it into crit.
Dwarf Sadly, Gun Specialization is shaping up to be a worse racial than ever in Cataclysm, with a tragic lack of PVE epic hunter guns in the game so far. Stoneform has the occasional use, but we're all about the guns, dammit. If past expansions are any indication, Blizzard will shake up what the best ranged weapon is for each tier -- sometimes a gun, sometimes a bow, and sometimes a crossbow. The lack of consistency makes the dwarven racial less desirable, though dwarves themselves very much remain objects of intense desire.
Human Nothing great for hunters. Every Man for Himself can be useful at times, but humans are a poor hunter race.
Gnomes Ghomes cannot be hunters.
Night elf Shadowmeld doesn't really help your raid kill bosses, so about all elves have going for them is Wisp Spirit. It seems somehow appropriate that elves' racial should only work after you kill them. This ability was not, however, quite good enough to put them above gnomes on the list.
Okay, with the good guys out of the way, let's move on to the Horde with their tradition of incredibly powerful and effective PvE racials, which they use to ruthlessly dominate world-first progression in an attempt to compensate for their looks.
Orc Leading the Horde pack are the orcs, bringing both Blood Fury and Command to the table, a brutal combination of DPS racials.
The 5% pet damage from Command is obviously amazing for BM hunters, since it applies to Kill Command, but keep in mind that even SV and MM pets are doing thousands of DPS these days. Add to that over a thousand attack power usable twice a fight (in conjunction with Rapid Fire, of course) and the fact that none of their racials are dependent on a specific weapon, and orcs lead the Horde in hunter racials.
Troll Trolls bring both Berserking and Bow Specialization to the table, making them a strong second-place Horde race.
In some situations, trolls can even gain a higher theoretical DPS than their orc fellows, as long as they aren't BM and as long as they have a bow. This gets gear- and fight-specific, though -- sometimes orc racials will win out for a MM/SV, even over a troll with a bow. But because historically the best ranged weapon changes from tier to tier, trolls can't rely on always using a bow, and since even with the bow they aren't always on top, they have to take second place.
However, the difference between a non-BM, bow-wielding orc and a troll hunter are minimal.
Goblin Both Time is Money and Rocket Jump are valuable and desirable PvE racial abilities.
The benefit of 1% haste is a bit variable; it's always good, but since the value of haste fluctuates heavily with our position in the haste plateaus for our spec, sometimes it's great and sometimes it's just okay. Rocket Jump, like any movement-boosting ability, can be life-saving in a progression raid. Not to mention it's just flippin' cool as all heck.
Blood elf We've crossed the line here from "good hunter racial" to "and all the rest -- whatever." Probably not surprising that it's elves that cause that transition.
Blood elves bring Arcane Torrent, which nets them a wee bit of focus that technically adds a wee tiny bit of DPS. Since it's technically a DPS gain, I've awarded them fourth place. Or, as I like to think of it, I've awarded them first place in the Horde racial losers.
Tauren The base health increase from Endurance can be useful -- far more than War Stomp stunning mobs for a boss fight. But really, hunters shoot cows; cows aren't supposed to shoot back.
Undead I suppose it could be useful to throw off a fear every now and then with Will of the Forsaken, so there's an occasional fight where their racials have any benefit to us at all.
Scattered Shots is dedicated to helping you learn everything it takes to be a hunter. From leveling your hunter through optimizing for heroics, pre-heroic loot and pre-raid loot, then on to choosing the right spec for the right job and how to "aspect dance" to maximize your DPS, we've got you covered.