Ok, here's what I'm thinking (for single button+d-pad controls.)
We use the tap/press system like fish suggested for offensive moves and combos. Adding in direction+button pressing activates stronger moves, special moves and the like depending on the situation (E+___= strong punch, S+___=down-special, etc.) Defense is handled by pressing back, and we include:
- B is guard, and we make guard only last 3-4 hits before it breaks or disappears.
- B+L is a backwards defensive dash. Very short in range, you take 1/3 the damage you would normally take, and you cann't be stunned (unless by a super.)
- B+R is a counter-tackle. So, you're blocking and then hit the R button and go into a tackle. If you time it right when the enemy is in their recovery period from an attack, you'll tackle them and knock them horizontally to the edge of the screen (check Ciel's 3-hit punch at 0:38 in this vid for an example.) A counter-tackle followed by a ranged attack or dash/run can lead into a corner air-juggle, though it'd be hard to get your timing right.
- B+A starts a special drive. While the drive is activated the controls for the character change, allowing for specials, supers, and shield breaks. And, let's say special drive lasts about one second. Or B+A and a direction will create supers.
So we have blocking, jump, double-jump, back-dash, defense dash, tackle-counters, parry and reverse parry. And to add even more defensive strategy, we could allow parries and reverse parries to be used while a player is in a combo, only after a certain number of hits in the chain have connected, and make it harder to time than normal parries. That should be more than enough defense, and if it's standard for all characters then we can go the GGXX route of characters who are all broken, but in their own special way. And so long as no character's offensive capabilities supercede the defense rules the game will be less broken than it could be.
So it's similar to SSB in it's simplicity, but with a bit of timing and learning you can use a wealth of techniques and skills.
EDIT: You guys should post these suggestions in the gameplay thread, since a lot of people started voting for 2-3 button controls: http://forums.tigsource.com/index.php?topic=937.0
EDITEDIT: Just realized a problem with the counter-tackle, you can't block and hit right at the same time ^_^;; Maybe an even tighter timed parry like in Soul Calibur with red parry's?