The latest version of iTunes has gotten a LOT quicker in my opinion (I have a 400gb library) and run it both on Windows and OS X.
What i would LOVE for them to do is this: You know on OSX when you hit the green button and it goes to a mini player mode, if you double click a file in finder instead of annoyingly importing it to the library play it in that mode.
ITunes works only if you keep your music organised properly, if you don't it's not really the app for you. (I still use Winamp 2.x on windows)
I'd also love them to make a service based server version of iTunes (just like dragonfly) but supports videos and album art etc.
I don't think Apple will go for the whole file/folder based playback for the iPod seeing as their store is heavily integrated with iTunes it's a great medium for selling music, which is the ONLY reason why iTMS has been so popular.
I have been waiting for this for a very long time. I would love to see something like this. I would also like to see it track folders.... IE if I put in new music or movies I would like iTunes to do a scan of my folders say once a day, twice a day etc.. to find new files to add in.
To the poster. I couldn't agree more about iTunes being bloated. However I will say it doesn't feel bloated on my Mac boxes but on my Windows XP box it feels bloated and slow. With my setup I have the windows box doing nothing but iTunes for my massive library of movies and music. Even with the newest version, it still feels a little slow. I don't use cover flow on the machine just a straight list. I have stripped all of the unnecessary files off the windows box but it still feels laggy. Even with 4 gigs of ram.
However in all fairness this isn't just a music player. iTunes is pretty much my media hub now. I don't sync photo's to it thou.
Like others have said, there are other alternatives to playing your music and syncing your iPod. However I don't know of anything else for syncing your iPhone. Maybe someone here has an alternative to that too!