I recall reading an interview between one of the current crop of films with Kenny Baker’s reaction to George’s announcement that R2 would be strictly CGI, and he wasn’t happy at all. As I recall, it was he who made the comment that R2 would lack “humanity” if he wasn’t inside the costume.
As for why Baker would still do the role, it’s really not surprising, since there’s not a lot of roles for midgets.
I can imagine why Lucas might want to keep Baker playing the character, since Hollywood is all about image, and how could you have a good image if you screwed over a midget?
I don’t know if “screwed over” is the right phrase. George Lucas has been very generous in giving points (percentages) to his actors, and I’m betting Kenny Baker can live quite comfortably without ever having to work again.
Anthony Daniels grumbled a bit about the CGI Artoo – he said that the characters were basically a music hall (Americans read “vaudeville”) duo, and it was difficult to pull off his performance without the presence of his… uh… counterpart.
Which makes sense, even if his partner did spend all of his time hiding in a rubbish bin.