Yes, that's right; all characters are stripped down to the basics to rebalance the playing field, and the only thing you can customize is whether your character will wear his or her normal costume or alternate costume (in particular, I tend to use Cloud in his alternate costume). You also cannot level-up in arcade mode; everyone is fixed at level 10 in easy, 50 in medium, and 100 in Time Attack. Time attack is a bit more complex than easy and medium modes, because all characters have a specific setup, which determines how the character will act in battle, and they also have a predetermined summonstone (there are no summons allowed in easy and medium modes). Further, in Time Attack mode, you are offered a choice on which set of opponents you want to face off against at the beginning of the round, whereas in the easy and medium modes, you won't know who your opponent is until right before the match, and they are determined randomly.