Ok so here it goes.
Sheik, as a Zelda character isn't really altogheter an important character to the Zelda universe as a whole. She has had only 1 role and that's it. She was a disguise for Zelda, who only showed up to teach you a song, tell you a poem and dissapear. Not a whole lot of debt about her. But alas, turns out she's Zelda.
Zelda is the namesake of the series obviously. The Zelda we've seen in Smash so far, was by her introduction soley based on her Ocarina of Time appearance. By time, the most important role Zelda probably had in the series so it was only logical. In Brawl, she was based on her appearance in Twilight Princess, using the same moves from Ocarina of Time still. However, there was no Sheik in Twilight Princess. And here comes a tricky part with 2 different sources saying opposite things:
1) A source claimed Sheik was planned for Twilight Princess and was drafted for. But didn't make it in the final game because reasons.
2) Another source claims the model of Sheik was 100% made for Brawl.
Anyway, Sheik made it in Brawl which was sort of weird seeing many expected her gone. Sheik was a popular character in Melee however. Mostly due to her tier placement, and to avoid people saying 'TIERS DUN MATTER / DUN EXCIST' let's just say she was an extremely powerful character that was easy to use and pick up. Very much unlike other top tiers as Fox, Falco and Marth who have a much higher learning curve. Alas, Sheik was nerfed in Brawl greatly and nobody played her again. Not even the casual crowd or the 'hardcore Melee crowd' saw much appeal in Sheik.
Now, Zelda had increasingly important roles after Ocarina of Time. And since Sheik = Ocarina of Time Zelda, and Zelda and Link are different incarations everytime, Sheik obviously didn't appear in any of the following games. Very little characters do re-appear in Zelda lore however. Only Link, Zelda, Ganondorf and just a handful of others do. And even these handful of others and Ganon(dorf) are not a given.
Having Sheik in Zelda's moveset kinda goes against making Zelda being a well designed character that portraits her roles in the games well. She's always a person of high magical abilities however, so Din's Fire, Faore's Wind and Nayru's Love are hardly a bad thing, especially as they refer to the Goddesses of Hyrule. Sheik... Is just Zelda in a disguise. And since it was such a huge spoiler in Ocarina of Time that Sheik = Zelda, I honestly doubt we are ever gonna see Sheik again in a Zelda game? Why? Obvious spoilers.
In Smash, due to Sheik being so strong in Melee, nobody used Zelda. In Brawl, because Zelda was so horrible and Sheik slightly less so, almost nobody used Zelda. Yet, the two are balanced to match ONE playstyle which is the 'officially implied' ; soften up with swift Sheik, finish off with slow Zelda. Zelda being incredibly slow, light, immobile and laggy has suffered immediately from this. There was no reason to play as Zelda, as her style was written extremely badly. And Sheik could finish far more effectively in Melee anyway. In Brawl, she has a terrible time killing off enemies but it's still better than using Zelda who has like no options vs any character besides Ganondorf.
Instead of stressing a 'perfect balance' between these two characters that's seemingly as hard as try to implement Ridley in Smash (joke) and stressing a 'SHEIK SHOULD BE IN CUZ VETERAN' approach, why not just scrap Sheik entirely? Sheik is the 'sub' character to Zelda, no-one with a sane mind would say that Sheik is more important than Zelda. Zelda is obviously the 'main' character, much like Pokémon Trainer is the 'main' character out of the trio, and Samus > Zero Suit Samus. No Sheik would allow to try a different approach to Zelda's moveset, which is much needed as a two-time low tier character and even BOTTOM tier character in Brawl.
Sheik's moveset doesn't have to be scrapped entirely. Use it to make Impa I say. A character that has appeared many times throughout Zelda, and had an extremely important and influential (to the plot and in general) role in Skyward Sword, with fighting abilities of her own. Unlike Sheik, who had a moveset entirely made out of scratch aside from her Up B. Canoncally, Zelda was even trained by Impa to become Sheik so it's a no-brainer Impa thought her how to fight to. Despite that, Impa's role in Skyward Sword is bigger than Sheik's was. And since Impa also appears in Ocarina of Time, and this being the only game that gives Sheik any sort of 'relevance', it automatically makes Impa more relevant to. Sheik cannot appear in a Zelda game where there's no Sheikah tribe. And thusfar, the only Sheikah in the series are Impa and Sheik.
So personally, I see the ideal situation as one where Impa replaces Sheik as a separate character, freeing up Zelda's Down B and limited playstyle. And also keeping an extremely irrelevant, unimportant character out of Smash who's STILL using a full moveset thus limits ammount of newcomers / time in general. Also, it gives the Legend of Zelda a newcomer in Smash akin to how Brawl did it without changing too much around.
Melee Roster: Link, Zelda / Sheik, Ganondorf, Young Link
Brawl Roster: Link, Zelda / Sheik, Ganondorf, Toon Link
Young Link and Toon Link both served as 'child Link' and fulfill a similar role with similar movesets yet with changes all around. This is why Toon Link was also a better character all around than Young Link perhaps. No matter, Zelda still got a newcomer and little has changed.
Hypotetical Zelda Roster for Smash 4:
Link, Zelda, Ganondorf, Toon Link, Impa
Sheik and Impa serve as 'Sheikah' rep, and Zelda is revamped to something better. Impa isn't a full Sheik replacement either, she's different enough to warrant herself as a newcomer, like Toon Link (but she has way more potential than cloney Brawl Toon Link however). Let's keep it true to Sakurai and expect little changes expect some moves thrown out for others and a full Down B. Am personally content with that, but could even provide a highly unique moveset.
Impa is a far more important Zelda character, and is one of the few characters outside of Link, Zelda and Ganon to have important roles throughout the series. You can't tell me that this isn't at least logical. To quote an older post of mine:
Hope I informed you well enough.