Lag is usually a user problem, or so it seems when I play. Usually whenever a certain player loses his turn, the lag clear up significantly... often completely. As for character selection, well... people have their preferences. Those three have some pretty powerful moves, which makes them a bit more desirable. After all, are you going to try and master Bass?
Though I do prefer players who can mix it up just a little bit. I'll not even get started on people who use Ryu so cheaply. Teleport, teleport, teleport... what skill!
I have 700+ online fights behind me, and I can usually find a good mix. It's been sparse lately, mostly because I avoid annoying players, and oh boy, are there a ton of them on there. Now, I don't avoid anyone, I just keep my headset off. I can definitely relate to how annoying it is when 1337 players just disconnect whenever they are about to lose. I have that happen all the time. The game should give the points anyway, or something more severe. It's so annoying and unfair. As someone who worked his way up from an F-(yes, ZERO points, I sucked and button mashed) to a B- I'd like my fair share if I finally get skilled enough to beat someone a bit higher, just as I'd give someone else their fair share if they beat me.
I also agree on the server settings. It's pretty annoying when you're in a fun room then some moron just ruins it. They should be locked so people know what they're getting into and it stays that way. DoA4 is still my #1 played game according to my 360 blog, but the online component is starting to wear out. At least playing versus, I have a guaranteed decent quality game. That's starting to wear thin in online play lately.