1. Change the clothing
2. Change the looks of weapons, terrain and buildings making it look as real as possible.
3. besides the 5 elements (which needs a lot of work to look cool) you need to work on Ninjutsu and Genjutsu... but in this case especially in Taijutsu... that would increase it's popularity since not many games like WOW and such focus on special moves instead of close combat.
4. S/T jutsu would make it more interesting but it should not be easy to get or else people would just go spam it.
5. Forbidden jutsu should be a restriction to it and which ones you can learn and at what state in the game.
6. You should expand the game to more than 2 villages, make it all the five great nations and also focus on the missing nin and the system of justice and all in the villages.
7. Besides making your own character i believe you should be able to meet/train with your favorite characters from Naruto.... (Not sure about it)
8. Every village need a Kage, my suggestion on this field is that a person who plays the game becomes the Kage, and not some computer animated thing as Kage.. it would make it more interesting to have a real roleplay as leader of each village..... (ofcourse you need to fulfill the requirements)
9. You should have certain people become sensei so that they can teach you like in the series it would make the game more interesting instead of you just walking around killing all the time and getting higher rank by killing, but training instead.
10. you need to have tons of missions and the Kage should deliver some missions to different teams and such... make it more fun by creating missions for teams and such.
11. Dont know if it is there... but you should make Dojutsu, such as Byakugan, Sharingan (MS should be hard to get) and possible Rinnegan (only one person in the entire MMORPG should have it - legendary shinobi)
12. Summoning jutsu should be made like the Toads, Snakes, and so on... Sage Mode and more including being able to travel to their lands.
13. Tailed beast should be made and special people selected as jinchuriki.
Thats my point of view on it as I will gladly start roleplay in it if it greatly improves.
I got more to say but I don't have the time and I am also a very lazy person to write such things.... i might add to it later..