I don't feel as if the option of choice takes away from the character development(as if there's a ton of that in Zelda games). I expect a female Link to make the same dumb, goofy expressions and reactions to story elements that a male Link would make.
If written properly or with the right amount of effort allocated, games have a potential to handle this idea with ease. However, there is the potential (as with Xenoblade Chronicles, I hate to cite the same title but it's currently the only reference I can think of, in terms of Nintendo-related products) for gender-ambiguous characters to be referenced less, or to have odd connotations. Would Zelda's dialogue with Link at the start of Skyward Sword have as much tension if she were talking to a female? She says she wants to ask him something, but is cut off- this moment would have a completely different connotation if the protagonist had a different gender, and that's a pretty awesome thing- if the risk to keep that sort of dialogue remains.
People argue that Zelda doesn't need to emphasize its story, or that it isn't necessary for the franchise, but I disagree. Games have to play a delicate balance with the AMOUNT of dialogue, because there can be lore-, narrative-, and/or flavor-based text. There's plenty of action-adventure titles, like Assassin's Creed, which do next-to-nothing in regards to their flavor-based text, but heap narrative-based text on the player. Zelda doesn't utilize nearly as much narrative text, but it does have a bit of flavor- and minimal lore-based text. Flavor text is what causes the most immersion- how characters react to you based on the things you do- and depending on the world the game is set in, there could be neutral reactions to a male or female doing something, or there can be the exact opposite sort of reaction. However, when characters within a game react in a neutral way to a player and then in the opposite way towards each other, it creates a disconnect that separates the player from the game world. The item-check character from Skyward Sword wouldn't be as endearing as she is if she didn't have the bizarre relationship she does with Link by the end of the game.
With Zelda, the tone of the series is more whimsical, and I would want it to stay that way. However, when the innocence and simplicity of its text is muddled with neutrality, I worry the overall experience would be quite bland. Once more, Xenoblade Chronicles X is an engaging world with interesting lore, but its flavor text and the way characters regard you is neutral because they have to give limited choice to response and encompass two genders. Zelda isn't particularly fascinating, locale-wise- it's an uncharted world filled with dangers, but they rarely boggle the mind like XCX's vistas, and you won't see any giant robots running rampant (or maybe you will, judging by the initial teaser). Thus, it's charm needs to be created by the characters and their whimsy, not by the world or the plot, which will likely involve a titular character and her rescue.
Some people say they don't play for the story, but if you're playing instead for the puzzles or combat specifically, I can't really comprehend. Text is meant to enhance an experience, and while some might argue its inclusion in the Zelda franchise, it has had mixed results that have helped and hurt the pacing and immersion of the game. I don't know how else to say this. I'm not going to decry the game if its narrative is less-complex than Skyward Sword or Twilight Princess, but I would like characters to approach and respect me based on my selection of gender. The easy way to handle this is neutrality- I'd like to see Nintendo rise to the occasion, instead.