Lets see..
We already have Mario, Kirby, Link, Pikachu, Samus, Zamus (I am counting this as a separate character, I think it was made to replace Shiek), Wario, Metaknight, Pit, and Snake.
That is a total of ten. I think there will be at most 40. So I am going to aim for that number.
I will take out Shiek (only because Zamus seems to fit that role, gun could be used for the needle move and whip move), Doctor Mario, Pichu, Young Link, and Roy. Furthermore, I think I would also take out FE Marth so another character can take his place.
I would keep the rest of the cast.
Mario Series/ Yoshi/Wario Series:
1. Mario
2. Luigi: Give him the vaccuum so he could have a more varied moveset from Mario. I know some people say that they should be similar because they are afterall the Mario brothers, but they were already similar in two games. Now let us try something different and have Luigi utilize moves from his own game.
3.Peach: I say give her some moves from her new game and get rid of some other moves such as her toward B. Also don't make her so strong. I have no idea why her forward throw slap sends an oppenent so far.
4. Bowser: He should be back with improvements to make him a beast of a turtle. Should be able to take most hits without stun, unless they are smashes. Harder to knock upwards then Fox and C.Falcon who are suppose to be lighter. Better fire move. Less lag on some attacks. Stronger down B and the ability to break shields with his down B and forward smash.
5. Yoshi: Needs a better toward B. His throws are pathetic. I think his throws should go further since they are not much of a combo setter. When he swallows an oppenent a red crossfire target should appear near Yoshi's head. You should be able to spin the target around Yoshi's body. By pressing the throw buttun again Yoshi will fire. Could shoot people up at angles in order to hit them with an egg.
6. Wario: Nice addition. He looks fantastic.
Dk Series
7. DK: This guy should be the king of spikes and meteor smashes. I think most of his ariel moves should hit the oppenent down. And don't make Falco's spike so much better then the monkey's arsenal of moves.
8. Kaptain K. Rool: I want the Kaptain version of the Kremling King. Although some version should be in. Donkey Kong needs his villain.
F-Zero Series:
9. Captain Falcon
10. Some villain or rival of his. Samurai Goroh or that guy in the black tights. No clones though.
Star Fox series
11. Fox- toned down
12. Falco- decloned
13. Andross with a body
14. Perhaps Krystal
Earthbound
15. Ness or someone to replace him. Not really a big fan of the series.
Kirby series
16. Kirby
17. Metaknight
18. King DeDeDe- dont merely make him kirby with a hammer, give him some nice creative moves. A heavier floater would be fun to play.
Metroid Series:
19. Samus
20. Zamus
21. Ridley- I like his design from the intro in Melee, although he should look meaner. He could be a scary villain to fight. Plus then giant reptile battles can be had with Bowser, Kaptain K. Rool, and the space dragon.
Link Series:
22. Link
23. Zelda (preferrably without Shiek, but if Sheik is still a transformation Sheik should have no KO power)
24. Gannondorf (decloned)
25. Either Midna on Wolf Link or the Skull Kid
Pokemon
26. Mewtwo (faster and heavier although the power is about right. Take away his down and forward B and give him better moves. I think his down B should be an extra shield that could absorb 40 percent damage or so before breaking. Once it is broken, can't be used until next stock.
27. Pikachu- Make him better and more fun to play as. Maybe quicker? I am not sure.
28. Jigglypuff
29. I say either put in Heracross or Lucario.
Older games
30. Ice Climbers
31. Pit
Third Party
32. Snake
33. Sonic- yea, the Mario/Sonic battle should happen. Throw him in
34. I am not sure if I want Simon Belmont over Megaman. Either one would make me happy.
Fire Emblem:
35, 36. Take out Marth and Roy. Put in one sword character and one either axe or lance character. Make their attacks exciting, not just slashes in a chosen direction.
I have four left over. I am not sure if I want Game and Watch in again. He was fun, but he could be replaced by another fun, "joke" character. I would miss his alarm clock noises though. I would want the last four to be from unrepresented franchises. Of course if Toad or Diddy did happen to fill in half those spots I would not be sad.