Many of the ideas on here are really nice. Just remember to not overreach the project and end up failing. Try to keep the same lovable, simple touch as the first game.
I would appreciate it if there was more of a story line, since I don't really know why I'm fighting besides the house and the girl. Maybe romance, maybe adventure, maybe something to do with the hilarious and lovable lost children? Side battle/things would be nice too, to gain more experience and stuff before a boss battle and to explore the world.
Sometimes, the mushroom gives me more potions, which get wasted since you can only have 4 of each total. I fell like this is a bit of a waste, and would like to see a storage system, where you can put spare potions in storage, so they don't get wasted. Seriously, where is the closet space in the house we bought?
Different weapon styles and skills would be nice. However, I don't want them to be all completely exclusive and require tons of training. If you could train a little for everything and have different skills, that would be good. However, if there are too many weapons and skills, over time you begin to focus on how to make all of them unique, which ones to equip, and advantages of each little stat instead of the actual adventure. I don't want to be locked into a certain skill set and armor style. Helmets would be nice, but the head animation was great in this game, and I would be scared to obscure it.
A pet addition to the house, where they can help earn money or help training with sir scarecrow, (training part was awesome by the way) and maybe help during battles would be nice.
A part where you can slowly collect a little group of adventurers through the story would be really cute. This might solve some of the skill set problem, where you can have team entirely of magicians or archers but choose to diversify and explore the different benefits. Of course, this is more optional than the other stuff. I don't want it if there is no story or development of the rest of the team.
Don't do multiplayer. Overall, unless your game is insanely popular and constantly played, that will eventually start detracting when people start dropping out because they found other games or have testing coming up. If I came in 5 years from now, and played Swords and Souls like it was brand new, I could still love it and enjoy even if no one else remembers the game. However, if there is a multiplayer part and I'm the only active player, I would eventually move on because I would not get the extra benefits that other players had.
An increased world map would be nice. This would add a more immersive experience and more places to explore and see, as well as new achievements. Continents, ships, and places with new armors and abilties. Also, if you choose the small group option, you can get them from other continents.
Most of the basic game play style and art is really good already. There probably isn't much change needed there.