What do Aion and the Wizard of Oz have in common? They both seem to have a lot of little people in them. The height slider in character creation allows for a wide variety of heights. Normally I would support more options in character creation, but when PvP is a big part of the game is presents some issues.
Smaller Hitbox. It's been shown that smaller characters have a smaller hitbox in Aion. Since Aion's combat does not have any FPS elements, it isn't a huge deal. You can also use tab to select them. It does make them harder to click on, which is still an advantage.
Lost in a crowd. Smaller characters are also easier to hide in the crowd. There really isn't much that can be done about this, but it is also another small advantage.
Fallen Earth had this problem earlier in its life. Since it uses a FPS-type system for combat it was a bigger issue. In the end, they ended up lowering the height range a player could choose. Otherwise everyone would have been quite little in PvP. In WAR, everyone has the same size hitbox.
In Aion's case, smaller characters will have a slight advantage. Many of the PvP video's already show a plethora of small characters being used. The hitbox issue is just silly, everyone should have the same hitbox size. The only exception is if being smaller results in some disadvantage.
It isn't a big deal, but PvPers will take any advantage they can get. Be prepared for the onslaught of Aion Gnomes ;)