I personally find the screen size ok as well,but could handle a little higher resolution (likes of 720x1024),formore comfortable reading of .pdf files and A4 manga/comic books.
I'd also like a touch screen on top of what's already here, just as long as this doesn't affect the battery life too much.
Folders make sense. Once you get above 30 books, searching for them becomes difficult.
Processing time should also become quicker,and would be nice to see some of it done in the background the moment files get uploaded.
I agree with JanetCin NC that the audio is utterly useless. Either Sony makes this an extended MP3 device (DAP) with the space (4-8GB internal)to host audiofiles (preferably mp3/wma/ogg and flac), and adds feats like EQ,wake time, internal speaker to it, or completely removes the audio section. No need to have a TV remote control being able to playback MP3 files neither...
about formats, doc and ppt (PowerPoint) would be nice.
My own idea: I'd like there to be some games,like Sudoku, Mahjong, mine sweeper, Solitaire, OXO, 4-in-a-row,and even chess!
These are extremely enjoyable with a touchscreen!
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