1. Auto-off needs to be manual or done in 30min/60min increments. 6 hours is illogical and was too long for Xbox, now with the 360, I fear the system kicking the bucket or worse.
2. Back should bring you back to the main dash, whilst hitting B remains unchanged and just brings you back one level. It seems very easy to implement and can be especially useful to if you navigate deep into folders for music on a portable device, instead of hitting B a bunch of times to go back, just hit Back once.
3. More video codec support would be nice, WMV alone sucks. How about some DivX support? I'm aware of TVersity, but that's Windows-only and for streaming, I play all my media from an external HDD.
4. The BC list needs to be viewable from the dashboard. There’s absolutely no reason you should have to go to a computer just to view text. Don't even get me started on the insanity that it the lack of a backwards compatible Panzer Dragoon Orta (not to mention a slew of other great, exclusive games; Otogi 1 & 2, JSRF, Riddick, Breakdown, OutRun 2 and RalliSport 2 say hi).
5. The d-pad is awful, fix it. It hampers an otherwise perfect controller and literally does not work properly, because when I hit left, it should go left and only left, not up or down. Playing XBLA games with it is bad enough and I shudder at the thought of trying to play Virtua Fighter 5 with it (it's also the reason why I didn't care when Soul Calibur II was made BC). Hell, just throw the old controller S d-pad on there, it's not the greatest, but it's immensely superior. I shouldn't have to sand down my controller to make it functional, and no, don't make us pay extra for something that should have been done from the start.
(Dis)honorable mention: Allow people to resubscribe to Xbox Live, RIP my Gold account 2002 (beta tester) - 2006. I'm not even asking for the ability to cancel XBL via the dashboard, since it's obvious MS doesn't want it to be too easy to cancel. I didn't know this until it was too late, but if you cancel XBL, you will revert to Silver, which makes sense. However, you can't get Gold again, unless you make a new account, which is just plain stupid, since it's essentially flipping a digital switch.
Four of the five can be done via a patch, here's hoping the annual spring update will deliver the goods. Maybe the Zephyr that's not coming out *wink* will have a decent d-pad, only time will tell...