Symbolism, Part 1
The characters in the SF universe stand for a number of things. There have only been a few characters added to the SF universe hastily or with little forethought. The majority however became instant classics because they were given some sort of background and origin story. This origin was explained to audiences over several games, animated movies and manga comics.
In the King of Fighters pop culture dictated the introduction of characters. Some characters were pulled from previous SNK fighting games, the Art of Fighting and Fatal Fury, which in themselves could be considered the first major rip-offs of SF II. Every year since the games inception has seen a new person or persons added based on what was hot in Japan at that very moment.
Instead of having some sort of visual link to the martial arts, as could easily be seen with Ryu or Chun-Li, pop characters in the KOF games “just knew” how to fight. The selection of moves, attacks and special attacks given to each character became more preposterous than the last. Recently the characters in the KOF series are so powerful that they are less human and more like minor deities. A loose story was then applied tying all of the random characters together and the game was packaged as the next great evolution in fighting games.
The importance of the character and their relationship to the plot of the game cannot be understated. Ian Lloyd said this about great character design in regards to yet another fighting game, Tekken.

On favorite character.
There is an underlying story in Tekken that is played out through the cinematics that I think have a good balance between spelling out just enough of a story and leaving the rest open to the user to speculate on. It’s a great way to engage the user and sometimes we get too wrapped up in clubbing them over the head with this stuff… Too many fighting games float the characters around all over the place, totally killing the believability. Note the term believability vs. realism. I can accept a completely stylized character as being believable if the conventions by which he is governed are perfectly laid out. Realism is usually pretty boring in most video games.
Ian Lloyd Associate Art Director / Character Supervisor SSX3

The concept behind the KOF series becomes less and less believable as the characters become more and more stylized. Each version of the game is just an assortment of characters that fight one another, a fighting game in the most uninspired sense of the word. The KOF series might even be considered a step backwards for the genre. Whereas SF, Samurai Spirits and Guilty Gear each contributed something new and unique through the characters, plot and game, KOF began subtracting purpose for cool. Sadly Capcom is but a breath away from following the same formula and shifting the classic SF character design into the weaker j-pop KOF design.
Great character design is recognized and adopted by a player almost immediately. Some would argue that great character design appeals not only on a visual basis but on a subconscious one as well. It is through these characters that a player suspends disbelief and enters the fictive dream of the game world. The more universal the character designs are the easier it is for a player to associate themselves with said character. If the character design appeals only to current j-pop culture then a large portion of the potential audience is immediately cut out. A player that cannot identify with a character in a game due to cultural barriers is less likely to become involved with the game or become a repeat player. The design for the War will introduce new and fresh characters but will not be predicated on trying to capture pop culture. The story associated with the War will also be more universally accepted as the battle between good and evil is more clearly presented. The KOF series might as well abandon the plot and just concentrate on matching high fashion victims against each other. The premise of the most recent KOF game must be lost in translation.

Symbolism P. 1, Symbolism P. 2, Symbolism P. 3