I voted for difficulty, but this will need some explaining.
The difficulty level is spot on around when the enemy first start carrying plasma rifles and wearing medium armour. Losing between 2 and 4 soldiers on each mission feels right. Thing is, when laser weapons come around, the difficulty level drops significantly due to the aliens lack of long range lethality until their medium armour and PB weapons come around. This is where my minor gripe can be found - you end up with elite troops that hve survived most of the middle game, and they will almost certainly get killed late game like the early game (2 to 4 a mission feels ok if it were not for the fact they were being replaced with greenhorns), and you have to replace them with rookies unable to carry weapons in combat that will level the playing field and that will not last more than a few missions. Either the middle game needs to be made harder somehow (though laser weapons do not need a nerf as they feel just right), or soldiers need to skill up faster so losing higher skill troops is not so game breaking in the late game.
Poll