There are 10. Rock Lee is unlocked after clearing the Story Mode for the first time. Playing Single Player with everyone unlocks Sharingan Kakashi and eventually Nine Tailed Naruto
Yes the game is rather short. Getting the most out of it involves playing the other modes to unlock the Damage and CPU highest difficulty, and then unlocking the secret characters. Even then, you can do all of this within 4-6 hours.
For me, personally, I was more a fan of Gekitou Ninja Taisen than Clash of Ninja. I played the third one. That game never got released outside of Japan because the GameCube was near its end.
