My premise here is that what matters for enjoyment the most is advancement, period.
I disagree, in that I think you may be conflating "advancement" and "development", and are dismissing one of them thereby.
Advancement is about power - increasing ability to do stuff. A character who advances can pick more complicated locks, fast-talk more smoothly, control greater magical energies, and/or hit harder with a sword.
Development is not about increase, but dynamism and change. A plot or character can develop without things getting "better" in a meaningful sense. Many plot developments are about things getting worse for the character, rather than better.
In terms of GNS theory, advancement is largely about a combination of gamist and simulationist elements. What you're talking about sounds like it deals more with narrative elements. It is my personal observation that a good RPG sits with a balance of these elements - so while you might consider adding in some form of plot development mechanics, you shouldn't neglect advancement in the process.
This is rather borne out by WotC's 1999 market research, in which they found, in general, RPG players like a little bit of everything - they like their advancement, and they like their developing stories. While there will be some who like a game that neglects some of the elements, in catering to that small audience, you'll lose more than you gain.
Of course. This is why I am talking about a more natural or rather intuitive design to the game's gameplay.
Given the number of "huh?" comments you've gotten here, I'm going to suggest that this is not at all intuitive or natural.
Here's the thing (again, using GNS theory as my base) - simulations and games are, to a large extent, algorithmic. Either by culture or by nature, we grasp games and simulations fairly easily. Grasping the essence of narrative, however, is another matter - good narrative is only algorithmic enough to fix it in its genre, but not much beyond that. If narrative is too algorithmic, we dismiss is as "derivative" and "hackneyed". The essence of good narrative lies in part in where it intentionally breaks the rules, rather than follows them.
That's why you see RPGs with narrative mechanics that don't determine narrative flow for you, but instead allow player to take narrative control in various ways. Good narrative is an art, a matter of taste (for which there is no accounting, or accountants), and cannot be dictated by a rulebook, but must be managed in situ.