Looks like I missed the vote, but I wanted to add my idea.

I like the two base difficulty levels, however I do think a third and fourth should be added on either end to accomodate the very casual and very hardcore fans.

In addition it would be nice a fine tuning of difficulty through a slider bar that goes from -10 to 10, with 0 being the default. This bar will slightly increase or decrease many factors in the game to fine tune the difficulty level you choose. At 1-10 it increases the damage done and HP values of the monsters you face by 10% times the selection, so at 10, you would have monsters that deal twice as much damage and have twice as many HP for the same XP value. At values below 0, so -1 to -10 it decreases the damage done and HP by 5% times the selection. So at -10 the monsters would do half the damage and have half the HP.

This would allow for the overall difficulty setting to be able to set what monsters you see, what abilities they have, and how in depth their tactics are, while the slider bar could fine tune the damage and HP to the perfect setting for each player.