What would you like to have changed or added to Vampirism

Vampire cloaks are outclassed by practically any chestplate in the game, so even the cost of one diamond feels not worth it. Overall, they feel like a kinda-cool-but-why feature. I heard something about being to upgrade them, but I couldn't find any indication of such a possibility existing.
Thus, I would suggest adding some kind of ability to improve a cloak - either by using it so it grows as you do or performing some kind of ritual. Upon levelling up the cloak may give more defence or some other buff like speed/jump boost/thirst rate reduction etc.

Does this make the mod experience more balanced?

I think so. It would make a currently underpowered item into an actually useful one.