I suggest a little music, some more attack styles, like jutsu attacks (Rasengan, Chidori, shadow clone, etc), or attack combos. Also some more sound effects, like some "HA!" and stuff, and reactions to getting hit, and the teleporting jutsu should have something like say... I puff off smoke when leaving and reterning.
And maybe different control placement, maybe remove the mutiplayer function and make the light attck 'z', heavy attack 'x', use jutsu 'space', and select through different jutsus with 's' and 'd'. Movement could remain the same with the arrow keys.
And maybe try to remove that white border the you can see around some of the characters.
Oh, and work on the AI, the fact that enemies practically cling to you, kinda annoying...
And of course these are all just suggestions, so of course, feel free to disregard all of this.