Why Lizardmen over Folk-of-the-Woods?
Is it because the area where TT takes place has a different native population then Cera Bella?
Or did you do it because you prefer lizardmen over another elf-like race? (I personally prefer lizardmen)
Well, I think a bit of both. The closest things we've seen in Telepath to Lizardmen were Spriggat (I believe), and we have already seen a Folk-of-the-Wood, granted, not in-depth. Yes, this also has to do that TT may/does not take place on Cera Bella, thus allowing more variety... but that means that Spriggats are greatly spread out throughout the Telepath universe. Finally, I just personally like the idea of a bipedal, walking iguana with a spear.

Edit: Fixed my statement on where TT is based, as it is, as im2smart4u said, a speculation.