On the software side:

1. Fix Modest to work properly, every time, in every setting (IMAP or POP), with any connection (even if it regularly breaks during background mail check).
2. Redesign layout of File Manager and file selector to show more files at once and show as much of a file name as the screen width allows.
3. Fix File Manager and file selector to work with large directories, possibly add rudimentary sorting abilities for easier access (by-name, by-type, by-date, by-size).
4. Make all basic widgets (and the desktop, preferably) work properly in portrait screen mode. No need to make all bundled apps work in portrait mode, as it will take too much resources.
5. Make it possible for applications to use OpenGL ES APIs. The easiest way it can be done is to implement the exclusive full screen mode which gives application full control of the frame buffer and the 3D context. See how it is done in DirectDraw/Direct3D (Windows) and SDL (Linux).
6. Fix browser so that multiple Flash objects do not hang the tablet. Yes, I know that Adobe is to blame, but this can be worked around by not letting plugin instances take too much CPU.
7. Modify XTerm with the latest patches, including full-screen overlay keyboard.

More difficult stuff:
1. Add a decent dpad. "Decent" means large, easy to operate quickly. One way to do it would be to place four round buttons in a cross-like formation at the back of the device, opposite to the camera. The same pad can be used to operate the camera. (it is a hardware request, I know, the only reason why it is here is because it is important).
2. Bring back virtual input methods. A lot of people find it easier to use virtual keyboard.

These are the issues I have seen people discuss lately. There may be some others as well.