tinyE: You are one of the only people I've never seen complain about the original leveling system. To be honest I heard that patch made it so much better I never even played with the original system. Maybe my OS crash was sign from god that I should go back to basics. :D
QC: There's a patch to the leveling system?
The original leveling system works better than most people make it to be, but it has three fundamental flaws:
1. Skills aren't balanced at all, and as a result, you'll get into problems if you level the "wrong" skills. The system was designed mainly for fighters and mages, stealth characters are substantially harder to play.
2. It forces you to make a choice between either roleplaying, or building a powerful character - which is bad, the two should go hand in hand. There is an objectively "best" way to develop a character, which involves counting skill upgrades during the game, and training specific skills at specific times, in order to maximize your attribute gain (through multipliers provided during level-up). If you play the game naturally, you'll get 3 choices of raising an attribute by 1, perhaps one of them by 3. If you use the objectively best strategy, you will get x5 multipliers, resulting in a much more powerful character. But playing this way is more work than fun. So in order to have fun, you have to consciously decide to build a weak(er) character. That's not well designed.
3. The level system provides too little room for growth considering the amount of content the game has to offer. You will eventually max out all your skills and attributes. As a result, all high-level characters play pretty much the same, since they all have the same skill values.
One of the reasons why I'd never play without Galsiah's Character Development is that it addresses all three of these problems. It makes all classes and builds viable, allows natural progression of skills, removes the silly attribute multipliers, and removes the skill caps (while still making it much more difficult to increase skills the higher they are already), so that high-level characters are still distinct. As a bonus, it lets the leveling happen entirely in the background, so that it doesn't detract from the game, which enhances immersion.