Great job with the music... I suggest working on more characters though. The physics engine is pretty good, though the AI is so slow I seem to never get hit, so I can't really tell how bad flinching is.
If you want to make it awesome, you'll have to add in stuff like grabs, and priority when it comes to attacks, too. Really, this is the best I've seen so far. Please don't disappoint!
Almost forgot! I played a 4 minute match and went back to the first menu then back into Solo mode and the background music seemed to get faster... I'm not sure if this was intentional or not, but it seemed a little off to me.