Blu-Ray: As much as I would like one, it won't be economically feasible. Adding one would jack up Apple TV's price toward PS3's territory ($300). Apple TV needs to go down in price ($200 or less), not up.
1080p: Many people say 1080p isn't necessary or realistic (aside from trailers and home movies, not much contents available legally), but back when Apple TV first came out, there wasn't much 720p contents either. Slight refresh in CPU and/or GPU should allow 1080p at no cost.
Subscription: Netflix-style subscription is a must, either by striking agreements with content publishers or partnering with Netflix and the likes.
App Store: App Store would be fantastic, for anything from games, social networking, to additional codecs.
Safari: Particularly if it adds Flash for Vimeo, Hulu, etc.
AppleTV as a TV: Although I would jump at the chance of such product, TV is highly saturated market. It is said that Apple does have prototypes, so it is not entirely outside the realm of possibility, but I don't see it happening yet. It would be fantastic if Apple TV gets passthrough audio/video input, however. That would allow Apple TV contents (App Store apps, video, audio) to appear regardless of active video contents (simply connect it between receiver/switcher and TV).
Larger hard disk: Some users stream from another PC or Mac, which is fine. But Apple TV should get larger SATA hard disk for those that prefer faster and dedicated local access. Also, enable external hard disk via USB already (bonus point for DLNA).
Better remote: Although some like simplity of Apple Remote, I would like something that can minimally control the TV (input, power) and audio volume (TV, receiver) as well.