Note that this list only depicts my opinion of how effective each character is in a Free For All setting and should not be referred to for other fields of play. This list is open to change as play styles adapt, players learn, and changes are made.
S Tier: Kratos, Raiden, Nathan Drake
A Tier: Sly Cooper, Fat Princess, Evil Cole MacGrath, Cole MacGrath, Ratchet and Clank
B Tier: Toro, Parappa, Big Daddy, Sackboy, Sweet Tooth, Dante, Jak and Daxter
C Tier: Colonel Radec, Nariko, Spike
D Tier: Sir Daniel Fortesque, Heihachi Mishima
TBP Tier: Kat, Emmett Graves
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Tier Explanation
S tier: These characters can generate AP very well, have extremely efficient supers, and can effectively control a crowd.
A tier: These characters can generate AP well, have efficient supers, and can hold their own in a crowd.
B tier: These characters can do all that A tier characters can but just not AS efficiently, or really excel in one or two of the listed traits.
C tier: These characters either have a more difficult time generating AP or have average supers, but can be effective in certain matchups.
D tier: These characters cannot generate AP as well as the other characters or lack supers that are effective enough to keep up with the rest of the cast.
To Be Placed tier: These characters have either been newly released, have undergone a change, or are just difficult to truly understand their place and will be placed once a solid opinion has been made.
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UPDATES
12/9/12: Tier list published.
12/11/12: Updated the following:
Colonel Radec moved down from B to the top of C.
Sackboy moved up from TBP to B.
Dante moved lower in B.
Evil Cole MacGrath moved up from B to the end of A.
1/16/13: Updated the following:
Kratos moved up from A to S.
Nathan Drake moved to the front of A.
Cole MacGrath moved from B to A.
Toro moved up higher in B.
Dante moved to the end of B.
Sackboy moved lower in B.
Ratchet and Clank moved from B to the end of A.
Jak and Daxter moved from D to the end of C.
2/213: Updated the following:
Kratos moved to the top of S.
Raiden moved down in S.
Nathan Drake moved from the top of A to the end of S.
Toro moved to the top of B.
Sackboy moved up further in B.
Jak and Daxter moved from the end of C to the end of B.
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Any comments, questions, or suggestions are welcome. If you feel a character has been misplaced please feel free to elaborate on why so we can all come to an understanding.
I will be releasing a 2v2 and 1v1 tier list in the near future, so look out for that. Thanks for reading! 
I agree with most placements, though the big one I don't is with Raiden in his own top tier, but thats just me personally, and my reasons why are probably not relevant - I've faced a LOT of Raiden players, and one expert Raiden player in particular and feel I have an insight into that character's faults/moves that theres some element of predictability with him that I don't have with others. Not to mention I main Fat Princess and I think her moveset makes for a good, fair match up whereas when playing as say Sir Daniel, the pressure is most definitely on!
I really enjoyed your tier explanation as well, all tier lists should come with this, it actually made this worth reading.
