I think character creation would be a bad idea if you can customize combos and jutsu. Because it would have a negative effect on the overall balancing of the game. If you can customize those things, you can potentially give your character all the best combinations and have no weaknesses. Now if you could choose from a few premade movesets with preselected jutsus, like a fireball type ninja, a chidori/rasengan type ninja, or something else, and they all had preselected movesets (and you could customize their gender, looks, etc), then it would be fine because the balancing would have already been handled. But being able to customize it all could potentially break the balance.
Its a nice feature that anyone could have fun with, but I think balancing is more important than a silly feature like custom characters.