It's important to keep the game balanced... I for one would not want to play a Smash Bros. game with 14 different Mario or Zelda characters... that's over-kill.
With that out of the way, here are my picks!
New characters:
-Wario: His different caps, plus his classic shoulder-rush attack would make up his moves... different transformations (like Zombie Wario, burnt Wario, etc.) would be his alternate costumes.
-Ridley: He'd be a floater like Kirby, but about as big as Bowser. He'd be a lot lighter than Bowser of course, due to his almost skeletal build.
-Pit: One of my FAVORITE/most over-looked Nintendo characters... Though I wish they'd just call him Kid Icarus... sounds a whole lot cooler to me. He could shoot arrows (of course) and use the stone-smashing hammers.
-Little Mac: From Punch-Out!! Nintendo's ORIGINAL fighting game... he could have combos like Roy and Marth.
-Jeff: The secret agent kid from Earthbound... lots of potential for cool moves with all his gadgets.
-Meta-Knight: The baddest mutha to ever strut the Kirby series... love that armor and sword.
-Diddy and Dixie: They can be a team, like the Ice Climbers.
-Samurai Goroh: He'd be a big, slow Capt. Falcon (taking the place of Gannondorf, who'd get all new moves).
-Captain Olimar: He could utilize his army of 100 Pikmin for his special moves, making him a very unique character to play as.
-Someone from Advance Wars: Preferably the girl with the big wrench. She's dreamy. I've never played it, but people dig it.
-Someone from Golden Sun: Again, never played it, but it's a series, so let's get somebody from this game!
Revamped characters:
-Gannondorf: Oh yes. Give him his magic attacks from Ocarina of Time... except for Down-B. Down-B transforms him into the huge, lumbering pig-monstrosity Ganon from the very end of Ocarina (and back again, making him similar to Zelda/Sheik). Gannon would be very slow, but very powerful, roughly a little bigger than Bowser. I'd LOVE it.
Alternate costumes:
Mario- Dr. Mario (he doesn't need to be a whole separate entity, but he can still throw pills instead of fireballs), Paper Mario, Mario with FLUDD, Raccoon Mario (he can use the tail instead of the cape!) and Tux Mario (from the cover of Mario All-Stars... plus it'd be classy).
Luigi- Luigi with Poltergust 9000 (from Luigi's Mansion), Fire Luigi, Frog Luigi, Paper Luigi.
Link- Oni-Link, Young Link, Wind Waker (cel-shaded) Link, Goron Link, Zora Link, Deku Link.
Samus- Phazon Suit, Gravity Suit, Fusion Suit, Justin Bailey (me-OW ) and the stripped down Power Suit (like when you lose all your gear in Prime or at the beginning of Super Metroid).
Donkey Kong- Original style Donkey Kong (from the old arcade games), and DK Jr. (hell yeah)
Bowser- Wart (Wart would breathe toxic bubbles instead of fire, just like he did in Super Mario Bros. 2).
Yoshi- Birdo, Boshi.
Pikachu- Pichu. If they take out the trucker hat costume, heads will roll. That is all.
Falco- Slippy Toad, Leon (the Chameleon from Star Wolf)
Fox- Peppy Hare, Wolf O'Donnel (the leader of Star Wolf)
Captain Falcon- Blood Falcon, Phoenix (thanks Ryantendo).
Samurai Goroh- Black Bull, Deathborn.
Ice Climbers- The Fire Divers. Yeah, I made them up. Think Ice Climbers but in red and orange diving gear, with axes instead of hammers. I like it.
Wario- Biker Wario (of Wario Ware fame), Vampire Wario, Zombie Wario.
And I don't know who he should be a costume for, but I'd LOVE to see Mach Rider (from his self-titled game) as an alternate outfit. Maybe Samus or Capt. Falcon? I don't think he's got enough potential for original moves to need his own character, but I think he'd be a LOT of fun to play as.
Those are the characters I want out of my next Smash Bros. game... I wish I worked for Nintendo...