This is what Minecraft 2.0 should be like in my opinion. As far as mobs and animals go, anything goes, these are just my ideas.
Items, Blocks, and Ore
First of all, no more diamond armor. It dosesn't make any sense. Diamond tools are still good though.
Diamond Tool Update
Diamond tools would require steel rods rather than sticks and their damage would be increased to 5 more than iron tools. When broken, they would drop 2-4 diamond shards per diamond used to craft the tool. Their durability would also be doubled. Diamond tools would also mine twice as fast.
Titanium would be a new ore. Titanium dust would be found by mining sand with a shovel enchanted with silk touch. Then you could use an electric furnace to turn it into titanium nuggets, and then titanium ingots. Titanium could be crafted into tools that have approximately 1,500 uses and the armor would have twice the durability of the old diamond armor. It would need to be reinforced with steel ingots. Titanium tools would also mine faster than diamond tools.
Steel dust would be crafted from 6 iron ingots, 1 powdered graphite, 1 nickel and 1 chrome ingot. Steel ingots could be obtained by smelting a piece of steel dust. Steel could be made into steel rods (crafted like sticks except replace planks with steel ingots). Steel rods would be used in place of sticks on emerald, ruby, sapphire, titanium and diamond tools. Steel tools would deal the same damage as diamond, mine at the same speed but can't mine obsidian and would have approximately 1,000 uses. Steel armor would replace diamond armor and would have the same protection/durability. When a steel tool or armor breaks, it would drop 1 piece of scrap steel for every ingot of steel used to craft the equipment. When a tool that was made with steel rods breaks, it would drop 1 scrap steel. Scrap steel could be melted down in a furnace into steel ingots.
These would be pieces of diamond that are the equivalent of nuggets of other ores, but with the disadvantage of the fact that they couldn't be reforged back into diamonds. They are only useful for currency and making diamond arrows. Diamond shards could also be obtained when diamond tools break. When a diamond tool breaks, you would get 2-4 diamond shards per diamond you spent to craft that tool.
Iron nuggets were added in 1.11.1, so this will not release in 2.0 Update. More about 1.11.1:
New arrows would include-
Diamond arrows, which deal 12.5 damage as opposed to the normal arrows which deal 9. It would be made by replacing the flint in the arrow recipe with a diamond shard.
Stone arrows, which deal 6 damage and would be made by replacing the flint in the arrow recipe with a piece of cobblestone.
Iron arrows, which deal 10 damage and would be made with an iron nugget.
Gold arrows, which deal 9.5 damage and would be made with a gold nugget.
Bomb arrows, which deal 8 more damage then the arrow you make them out of and explode with about two-thirds the power of a creeper explosion. They would be made by combining any other arrow type with two gunpowder.
Flame arrows would deal 9 damage, ignite the target, and actually ignite any blocks they hit. They are made by adding one piece of coal to any arrow.
Flare arrows deal only 5 damage but light up the area where they land and have a 40 % chance to ignite mobs they hit directly. They are made by replacing the flint in an arrow with a torch.
Scatter arrow. A scatter arrow expands into 3 to 6 normal arrows that each deal 8 damage upon firing, depending on how many arrows you used in the recipe. The recipe is anywhere from 3 to 6 normal arrows and 3 string.
Potion arrows. These are arrows that are made by mixing an arrow with the ingredients to any type of potion. The ones that deliver negative effects deal 9 damage, and the ones that deliver positive effects deal none.
This version of the furnace is made by 4 iron blocks and 4 iron ingots. It can only be powered by coal, oil, or at least 4 daylight sensors, and absolutely devours coal if that is what you decide to use. The electric furnace is used to refine titanium and aluminum, or to electroplate gold onto any object, turning it into a golden version of that object.
Ruby, Saphire, and Emerald Tools/Armor
Rubies would be found in the nether. Sapphires would be found in cold biomes. Ruby tools would be crafted like regular tools except replace sticks with blaze rods. Sapphire tools would freeze mobs that are attacked in ice blocks and ruby tools would light them on fire. Ruby and Sapphire tools would have approximately 2500 uses, mine nearly as fast as diamond tools and would deal 1 less damage than diamond tools. Ruby armor would give fire resistance when equipped and sapphire armor would give conduit power when equipped. Emerald tools would deal 1 less damage than sapphire/ruby tools and would have approximately 2,000 uses and mine at a slightly slower speed than ruby/sapphire tools. Emerald armor would not exist. Emerald tools could be substituted for the amount of emeralds used to craft them when trading with villagers. You would also get 1 steel scrap back per tool when it breaks.