Personally I don't have a problem with the standard Bane; it's a little weak but it definitely still has its place. Here's why.
A smart player has access to multiple weapons, and most DMs will throw multiple Bane weapons at you. The existing abilities of a Bane weapon are equivalent to a +4 ability against the intended monster type and +0 against everything else, so you break even at +2 if you can use the weapon 25% of the time, right? (Remember the n-squared part of the cost equation)
That's where the "multiple weapons" part comes in. That +1 Dragonbane sword you found a little while ago may be collecting dust in your backpack now, but if you go up against a Dragon it'll be your best weapon. So, for the same cost you'd get from a +5 weapon, you could get three +1 Bane weapons. Or, a +4 and a +1 Bane.
If you still think it's weak, say that a Bane weapon bypasses the DR of the that enemy type altogether (it's already effectively a +3 against DR, not a huge boost). Against the more common enemy types this isn't useful, but against really old Dragons, Demons, Celestials, Devils, Barbarians, Wizards, Sorcerers, Psions...
IMC we have something similar to that "Blood Metal" that Limper posted. But, I use it as the prerequisite for some really powerful abilities.
It's also a great tool for the DM, since he can put in a really rare, powerful weapon that the players can't use if they win. How many times, as a player, have you looked at the enemy's equipment (especially potions and wands) and thought "Hmm, which one of us gets that item after we win?"
My abilities (this is off the top of my head):
BLOODED: item must be forged in the blood of the crafter's racial enemies (DM decides who your enemies are). When wielded by anyone not of the crafter's race the item bestows one negative level (returns as soon as the item is released); when TOUCHED by a racial enemy it bestows two negative levels per round (return after 24 hours). Reduces overall Market Price modifier by 1, but increases the DC required to forge the item and requires some rare materials (including the blood).
It also prevents anyone other than the Blooded race from ever adding more enchantments to the item.
PROTECTOR: Weapon enchantment, requires Blooded. When wielded by a member of the Blooded race, the weapon becomes more effective (Enhancement Bonus +4, dodge AC boost, and some extra damage) against his racial enemies. Market Price +3.
Similarly there's an armor one that gives DR, SR, and light Fortification against enemies.
Note that Humans gain the "Weak Blood" ability; this is what allows them to crossbreed with just about anything, but it prevents them from using the Blooded ability, either as the enchanter race or as an enemy. Most of the other races have three or four racial enemies; Dwarves might hate Giants, Orcs, Dragons, and Aberrations, so a Dwarven Blooded weapon would be effective against a wide variety of things.
