Some of the racial characteristics do carry over. I conquered the Phong in one of my current games and they still have the high Environmental Resistance that I gave them. Characteristics like production or research abilities are harder to carry over, I think. How do you calculate the research on a planet if it has several different races?
What would be better is if the conquered races retained some memory of their identity, so that their empire of "origin" if it still exists can incite planet rebellion on worlds with this race much more easily and they are much more likely to join that empire than go independent.