A running issue within a good deal of shonen anime is the problem of early villains' power scaling when comparing them to later antagonists. One Piece has Crocodile, Bleach has the Gotei 13 and Naruto has the infamous Orochimaru, one of the Legendary Sannin. Orochimaru was introduced during the first couple of arcs of Naruto, and his power at the time was considerably terrifying. He toyed with Sasuke Uchiha, frightened Kakashi Hatake and fought toe to toe with the God of Shinobi, the Third Hokage Hiruzen Sarutobi.
Orochimaru had his strength diminished by the Sealing Technique performed by Hiruzen, but he was still considered a credible threat, and his feats up to that point were supposed to portray just how dangerous he was. Then came the introduction of Itachi Uchiha and Kisame Hoshigaki in part one, and followed by the entirety of the town-destroying-level powered Akatsuki in Shippuden. The issue of Orochimaru's perceived strength only got worse when the jutsu of later antagonists, combined with their destructive powers and innate skills, seemed to make everything in part one look like children playing at being ninjas. Nonetheless, this perception is not fair to Orochimaru's place in the story.
The Issue With Power Creep
Power scaling has always been a major issue within long-running anime series. The inclusion of Haki in One Piece has always been a point of contention, as it made some characters who seemed strong before and who should have known how to use it look tragically weak as the story progressed. In Bleach, there was a different issue -- the powers of the characters jumped around at such inconsistent levels that it was impossible to keep track of whether Ichigo Kurosaki was much more powerful than the captains or was on par with them, depending on what was going on in the story at the time.
Naruto seemed to suffer from a different problem in its power creeping. As the story got bigger, so did the jutsu. Ninjas also got faster, and Orochimaru's performance in part one simply could not compete with the likes of Kakuzu, Kisame, Pain and Itachi, the latter of whom was even shown in the story to have easily defeated the Sannin when they were both in the Akatsuki. The Reanimation Jutsu, which seemed so incredibly powerful in part one, was put to shame by Kabuto's version, and even Orochimaru's fight against Naruto in Kyubi form made Orochimaru appear to be only just surviving rather than competing on an even footing.
Orochimaru Was Far Stronger Than Portrayed
Whilst Orochimaru was weaker than Itachi and Pain, he was certainly not helpless. As a member of the Legendary Sannin, he was supposed to be on par with Jiraiya, who Itachi and Kisame feared confronting, and he put up a challenge against Pain and Tsunade, who performed the best in the battle against Madara Uchiha of all the Kage. Orochimaru's return later in the series tried to imply that his power had become more consistent with the rest of the heavy-hitting characters, but the memory of how he was portrayed in part one lingered in the minds of audiences, forever staining his potential.
If Orochimaru had been introduced in Shippuden or had not actually engaged in combat until the powers of the characters had dramatically increased, he would likely have been a far more threatening foe in the eyes of the fans. However, he was still an enjoyable villain in part one, raising the stakes of the conflicts and appearing to be on an entirely different level of power. It's just a shame that the high level in part one seemed comparable with a Chunin in part two.