I just tried to create a new char to see if this really is a bug. I gave him soul reaver and a pistol and went around killing stuff. My dmg never increased and only my attack and defense values went up slightly with each kill. However after a while they would start going back down again. I even tried it with shuriken and throwing daggers just to see if the weapon type matters, but they behaved exactly the same. Looks like it's working as intended to me.