One of the things that sets the iPhone apart from every other phone is its multi-touch interface, which makes using the iPhone so intuitive. I still impress friends with the ability to pinch photos, and still think its fun to to do myself. Of course, getting those photos, movies, and music onto the phone is a snap... All you have to do is plug it into its dock and it syncs. The ease of which this happens really can't be understated.
Bringing a full-featured web browser onto a mobile device was a smart move by Apple. Safari is by far the best mobile internet experience I've had. Mind you, it has its limitations, but it's the best out there.
Of course, what Apple hasn't done, the development community has done in the way of hacking the iPhone into allowing native 3rd party development. I now can't live without my "jailbroken" iPhone and its assortment of games and utilities.
iPhone Wants: Software
What the development community has done through hacks, Apple has promised to provide via an SDK this coming year. However, I officially make my plea to Apple to make this SDK free to developers so that we can continue to see the kind of viral development that the iPhone has seen.
While I love the iPhone's OS, Apple does have some refining to do. For one, the lack of copy and paste ability continues to be a very real hindrance towards the productivity of the device. Also, voice dialing remains absent, a feature which is key to using the iPhone safely while driving.
iPhone Wants: Hardware
Any hardware upgrades would require replacing the current iPhone or perhaps the development of a 3rd party dongle, but some of the more sought-after hardware revisions include the inclusion of GPS (3rd party dongle in development?), 3G, and the elimination of the recessed headphone jack.
Of course, any (partial) list like this is completely subjective. What do you want to see out of the iPhone in this next year? The forums await...