Lots of good ideas thus far, here are my own after reading:
- Ability to download full TV eps, movies, and maybe music (though I would prefer that to be on my PC)
- Internet Browser
- Full mouse and keyboard support for both the internet browser and FPS and RTS games
- User content on the Marketplace
- Content from a video website, i.e. GameVideos.com or GameTrailers.com, for things like video reviews, new trailers and good user content. Also, it would be a great way to show off new 360 features without having to download stuff to your PC
- Podcast catcher (or podcatcher for those in the know

)
- A DVR would be great, but there's no way that would be put on
- Upconversion on DVD's
My biggest ones would be user vids and vids from a game video site. I love browsing places like that, and it could really expand the content on the Marketplace, as trailers get a wee boring after awhile.