The whole Web 2.0 era focuses on simplicy - clean, simple interfaces and applications that focus on a few things well. Rather than focus on enhancing MC to be the best contact manager around, keep focusing on what MC does best - Media.
I feel there is still room for improvement in following areas:
1) Social networking - linking MC with other MC users, and also social networking sites like Facebook etc.
2) Podcast syncing - I'd like to delete a podcast I've listened to on my USB drive (which I use in my car radio) and have it delete the equivalent file in MC. It then syncs any newly downloaded files to my USB stick. Currently, when I delete a file on my USB, it simply adds it back when I sync.
3) Ability to easily export all settings, not just library, to another installation of MC, including portable installs. This will improve the experience of running MC in VM's.
4) More improve lyric integration services.
5) More improved tagging functionality. Check out the excellent open source iTunes tagging application featured on Leo Laporte's Net@Nite:
http://polluxapp.com/6) Better cover art services that could automatically pull cover art at the click of a button (say from Albumart.org)
7) Keep Media Center as fast and responsive as it currently is.
Ability to easily set keyboard shortcuts / toolbar icons to things like favourite views/playlists.
9) Advertise more! Why don't I see MC being featured in media player application reviews?? No one seems to know about it. Does Lifehacker even know about MC and how much it can save time with media management?
PS. I would live to be able to delete a file from my library and disk through the right click menu in Playing Now.
I love Media Center!