Level 5 is the first big power boost, due to cantrips getting stronger, extra attacks for certain classes and a lot of new spells (especially the aforementioned and intentionally overturned fireball). There are other spells that might be game changers on level 5: Counterspell (I am very interested how that will be implemented), Dispel Magic, Fly (should keep you afloat for a whole encounter) or even Slow.
Personally I would tie level progression with story (or at least have that option), so encounters won't be trivialized by doing things in an "unexpected" order. Or maybe tying max levels to acts, like max level for act 1 is level 4 to not break the balance too much (extra xp could be banked to be used later). I already find the game way too easy after replaying for the 3rd time (1st time I found it freaking haaaard^^). Just by knowing what to expect and what to look out for makes everything a whole lot easier. Being able to use fireball (freaking 8d6 AoE dmg) or double eldritch blast + hex (potentially 2d10+2d6+2CharModifier every round) or 4 attacks with action surge (4d12+4StrModifier) on top of that would obliterate every challenge so far imho.