To increase your continues in increments of 1 simply play the game for 1 hour, after 9 continues have been gained the next hour gives you infinite continues. To see how long you have been playing simply go onto the 'Backup' screen from the start menu.
In order to unlock half the unlockables, you need to beat the whole game in one credit. Well, when you're on the last stock of your credit, unplug your controller and put it in the slot for player two. Hit 'start', and then keep going as player 2. The game will think you're still on your first credit, but you'll get the extra 4 lives.