I want to have a main hero similar to Ryu in Street Fighter, so these are my options.
Would it be more interesting if I made him an MMA fighter with worn out gloves, a background with taekwondo, karate and judo fighting with and is looking for the next big fight challenge and will face a rival foe? Or make him a former warrior monk that lost his friends and family at a temple that was destroyed by an unknown foe that he will meet?
The two characters imply significantly different tones for the whole game: sportsmanship and self-improvement fighting respected adversaries, in Oriental martial arts tradition, vs. tragedy, violence and revenge against an evil villain. It's a bigger choice than a character background.
Omae Wa Mou Shindeiru
What if I sort of merge the two? Or is that too complex?
I like how well @LorenzoGatti dissected the two visions. Merge the two? I don't know, personally that may over complicate things a bit. It's kind'a like owning a restaurant. You don't want to discourage your patrons by trying to appeal to too many demographics else everyone just stops coming because they don't know what to expect. I say go with one or the other.
Okay I think I'll go with monk then because I feel I can develop a more intriguing story with him, just hope the revenge plot is still okay to use and not considered overdone. But I can always change his story for the sequel 
There's a popular example of fighting game with varied characters and varied but not too grim storylines, and it's Street Fighter II, with all sorts of people joining the same tournament. But Ryu is only the first one of 8 (or 12, or more...) contenders, not a "main character", and character stories are mostly relegated to ending animations; players can simply choose a fighter according to appearance and moves, without caring too much about background.
Omae Wa Mou Shindeiru
You make a good point. And I definitely plan on adding a complete variety of characters. So what I should of said was in regards to not really a main character but a character that fits the Ryu archetype. That well rounded sort of basic easy to pick up mid balance character. I think I could pull this off with the monk idea. Though others have told me that using a more MMA style approach would do better justice cause it's more like a modern version of a Ryu type but the monk idea could sort of emphasize that disciplined power character I think and maybe a more harder style as monks are usually super fast and fluent, maybe having a variety of fighting type styles this monk could have a more power and quickness combined but not flashy so he's more the Ryu archetype. Could that work?
Is it okay I give the monk hero big muscles or will that upset players?
