Lots of good ideas above. I'll try not to repeat them, but I support the vast majority.
* Make the EQ settings (easily) accessible within the iTunes app. If I want to play around with the EQ, it means I'm listening to music. So why do I have to minimise iTunes, go to settings, go to music, go to EQ, select something and then go back into music player to change it? It's such a clunky time consuming solution.
* Likewise, turning off wi-fi and bluetooth is extremely clunky. Either allow shortcuts to them from the homescreen, or let these settings be accessed by the SDK so other people can build shortcut toggle apps.
* Let me turn "lock" orientation. Sometimes I'm lying down.
* Let me set the silent button to be able to silent *everything*. Including third party apps. If I've got the phone set to silent that doesn't mean I want any app I go into suddenly start blaring it's soundtrack. Hence me having it on "silent".
* Silent mode should be noted in the status bar at the top with an icon.
* Ability to block a wi-fi network. Especially those that auto-forward your browser requests to a login page that you don't have a login for.
* Let me send v-cards over Bluetooth.
* Let me send photos over Bluetooth too. And receive them. And videos. I was in a museum the other week that was transmitting videos about the exhibits by bluetooth. Fab idea. Unless you own an iPhone.
* Change the YouTube interface. Preferably from scratch. I need to be able to search by uploading date, by my subscriptions, look at channels, view a users other videos, view friends lists, leave comments under my logon etc etc etc. (interesting aside - I had a meeting with a Google higher up involved in YouTube mobile last week, where I asked about this. They told me it was built by Apple, and they hate it too. Indeed, they have a list of five "guiding principles" for mobile interfaces and the YouTube iPhone app breaks every single one).
* Let me get rid of Stocks.
* Let me change who provides my weather feed to that app.
* When I get to the end of playing an album in cover flow it should go on to the next album without any user intervention.
* When I listen to a new episode of a podcast, at the end it'll start playing the previous episode of that podcast automatically. When I listen the eldest episode it just stops at the end instead of moving to the next newest. Given podcasts should normally be listened to in chronological order this is utterly ass-backwards.
* Make the radio remote work. Seriously, this should not be so fracking hard. It's your own accessory.
* Nike+ support. Just make the dock connector work since you don't have a native radio like the touch.
* The dock connector should be accessable to people with the SDK for application usage.
* If not, at least do a bluetooth driver for keyboards.
* Let me sync notes. The entire app is as useless as a chocolate teapot while you can't do anything with the notes it creates - can't email them, can't copy and paste them to an email, can't sync them to your computer where you might be able to copy and paste them. Useless. And it needs landscape support just as much as mail/SMS.
Frankly I don't think any of these problems are hard to fix. And I don't think there's much excuse for most of them outliving firmware 1.4.
Phazer