Costumes would be super fun, but I can't see Nintendo using it as a way to condense roster space. While I think the babies are super lame, Nintendo is likely to try to cater to all Mario fans, including baby-fans. I'm sure Nintendo considers Baby Luigi and Baby Mario separate characters, so they'll continue to get separate spots on the roster.
Unless an awesome miracle happens and we get Kamek, the Koopalings, E. Gadd, Wart, Geno, Dixie Kong, Mona, etc. instead of the lame babies. I would love that, but I don't see it happening. HOWEVER, if alternate costumes were the only way to get all 7 Koopalings, I'd be okay with that. Also, I could see Nintendo just putting in a handful of Koopalings... I'd be absolutely okay with that. One for each weight class? Lemmy (small), Wendy (medium) and Morton (large)? Yeah, I'd dig that. I'd dig that like crazy.
IGN suggested biker attire for all characters on bikes, and assuming bikes come back for MK3D, I'd be super on board for that. Mario and the fellas rockin' leather jackets and cool helmets while the girls still get those form-fitting jumpsuits. I definitely hope bikes and tricks come back, but I won't be surprised if they don't.