Huh. Improving flaming sphere sounds like an interesting idea, although I'm not quite sure on the spell level. Obviously, if you can attack a mob 6 times as opposed to one time, it is a vastly more effective spell. Then again, that wont always be what you're up against. Hrmm.
If I had to improve the spell, I'd probably either go the route of summoning multiple spheres (summon 3 spheres, direct all of them as a move action) or a variant sphere. (Acidic sphere: this deals 5d6 acid damage; terrain the acidic sphere moves over becomes difficult terrain)
...good luck?
I'd work off of Ball Lightning, perhaps making it do fire instead of electricity and swapping out the saving throw penalty for something that lights those it hits on fire for extra damage on subsequent rounds.
First, yes you improved on the spell so I'd definitely bump it up to 3rd level. That said I would also change its save to reflex for half damage rather then reflex negates.
Personally, even with both changes I think it would still be a 3rd level spell and you'd get a little more for the increase. Also it fits the concept nicely. The way I've always pictured it, the reflex save negated the damage because you got out of its area before it had a chance to do damage. Much like passing your hand rapidly through a candle flame. You're basically making it more intense so that even relatively brief contact will still cause damage.
Of course abilities like evasion will still allow an individual to escape without damage but that's how it should be.
Incidentally, if you really like flaming sphere I'd consider making another version at an even higher level, perhaps 5th that was based on the 3rd level improved version but allowed several spheres to created and controlled simultaneously. After reading The Chorts suggestion I had a rather entertaining image of a bunch of flaming spheres rolling all over a battlefield chasing people around xP