passing story mode once has you unlock all characters but sasuke, itachi, and kisame. passing it again unlocks sasuke, and finishing all missions will give you the kakashi gaiden arc. its actually...
All of the characters available in Naruto Uzumaki Chronicles 2: Naruto Uzumaki Sasuke Uchiha Kakashi Hatake Neji Hyuga Choji Akimichi Shikamaru Nara Gaara Sakura Haruno Rock Lee Might Guy Kankuro...
Maybe because this game is set under a different time period in Naruto history, so only new characters introduced and some older, famous characters are shown.