(long top-level reply ahead)
There are two relevant concerns here: first, what turns off newbie players? Lots of people have focused on this to good effect. Second, what prevents someone who has learned the ropes from really getting into this game? As someone who overcame the first hurdle, played obsessively for a week, then lost interest, I think I can speak to both concerns.
tutorial/tilesets: I started playing dwarf fortress using an excellent tutorial that provided a pre-packaged version with the mayday tileset preinstalled. I don't think I would have gotten into this fabulous game were it not for that. Pre-packaging that tileset with an easy way to enable it (first time loading df="would you like to use ascii graphics or a tileset? you can change this later") would be huge. As for an in-game tutorial, that isn't strictly necessary since there are excellent third-party ones available. But I strongly encourage linking to one prominently on the download page, and perhaps also in-game. There's absolutely nothing wrong with the complexity of the game, but it is almost impossible to figure out without a careful tutorial.
game saving: many many people, including myself, loaded the latest season auto-save the second time they started df, which caused them to think that they had lost progress (and once they have done that, they have!). Perhaps I'm dense, but I did this many times, each time being incredibly frustrated, and my main save game ended up being the one marked year 03 even into year 10. something as simple as naming these save games "backup-xxxx" would be a huge help (preferably also warning the user before loading one of them!)
UI/framerate: enough has been said about this so far, I think. After making a fort of 60 dwarves, it is sad to see the framerate drop precipitously and know that it will only get worse. It is a serious blow to one's creativity to constantly think about the framerate implications of the cool things you want to do.
labour micromanagement: as several other people have said, it is fun to set up new industries, but maintaining them is incredibly frustrating. Putting a workshop on auto-build works well, until one of the source resources dries up, which causes all the tasks to be cancelled. It is also too easy to either run out of an item, or over-produce it. I felt that I was constantly in a seesaw between having no wood and having too much, having no alcohol and having gallons, etc. In an attempt to clear out stone, I let my mechanics produce thousands of mechanisms which I had to find storage space for. Having systems like "build 15 beds if there are none" would be so so huge. Generally, I found it difficult to keep dwarves busy without making them over-produce (thus causing problems with storage and hauling).
game balance: This is what ultimately why I don't play anymore, and has been mentioned by others. The game as it stands doesn't do a very good job carefully delivering challenges to the player in a way to maximize "fun".
This view has been expressed by others saying "the game is too easy", and by others saying "the game is too simulationist", and by other still in saying "the game is too hard". People saying these things have generally been attacked in this thread, the usual vein being "if you don't like it, don't play" or, for systems that are too easy "you don't have to play using X". The problem is that (in my mind) Dwarf Fortress is first and foremost not a simulation, but a game that uses simulation to produce varied and emergent game play. The reason why people are (somewhat) saddened about the current developmental arc isn't that they wouldn't like some of the new simulation components, but that the existing components haven't had their "fun factor" refined yet.
One good example is immigrants. Starting a new fort is incredibly exciting: you have so many new systems to set up and you're constantly balancing the work output of your very limited labour. You feel attached to each dwarf. Just as you're making a bit of progress, 12-20 immigrants show up. It is very easy to be overwhelmed. Your connection with each dwarf is severed. You often don't have enough for everyone to do. It is discouraging. People have been criticized in this thread for not being able to "handle" the immigrant influx, saying that it is an expected challenge of the game. Sure, but what happens is that you've replaced the challenge of doing what you can with limited labour with the challenge of having to micromanage three times as many dwarves. I think that this is objectively bad, and immigration should only be a certain % of your current population (max 50% at the beginning, less as your fort grows). As for those who complain that you can manage this yourself through init.ini tweaking: this is true. Tweaking should be for power players who want to go beyond the designers original intent, not be necessary to fix a game design problem that is commonly run into.
Were I in the position of developing df, I would try very hard to make the currently-available game as much of a "game" as possible, to ensure continued interest in its development. This would mean spending a few months working on balance issues in fortress mode, and consider gameplay balance fixes as important as bug fixes even while developing the next component of nifty simulation. Not everything can be fixed to satisfaction before developing more architecture (something several people have argued, and it makes sense). But as some people have pointed out, there are several things that should be able to be fixed by tweaking some constants (range attack, farming, immigration, perhaps trap trigger %, etc.). It feels like the current approach is to wait until a more robust/realistic simulation engine "fixes" the problem, which is unsatisfying.
Several people have commented that a lot of new features that _are_ being developed will have cool gameplay consequences. This is true (underground sites, poison, etc. do sound cool). But, will the necessary (imo) several months of making these things balanced and useful in-game be done next, or will another simulation system be done next? If the answer is the former, it is tempting to be excited about the future of df. If the latter, I'll try to forget about df and hope I stumble across it in five years.
I am a software developer and so I realize the tensions and tradeoffs involved. I hope I don't sound too critical of Toady: I have immense respect for his work and this game in particular.
It is truly an inspirational concept and game, and I hope it continued to be as it is further developed.