I think one format, one bitrate, one price, is best for the iTMS, though an improved bitrate would be good.  If you do have 2 tiers of downloads, make one Apple Lossless or something really worthwhile.
iTMS Audiobooks searching/browsing needs to be improved. It's hard to find anyhting that isn't featured or that doesn't have a famous author you remember.
More album art, the jewel case art, for an album avilable with your download. Not sure how to handle it since some people may not want all that due to either bandwidth restrictions or lack of hd space (format is also an issue I guess -- jpeg or tiff or other?)
user reviews of albums!
improved wish list abilities -- either make a user's page in the main pane with links to their iMixes and their wish list items or add the ability to place whole albums in a playlist like you can do with song previews now.
When Safari 2 in Tiger comes out, promote iTunes RSS feeds and options for them.
Easier navigation to videos, bios, soundtracks and such. Tie into some online merchandizer for band t-shirts and ties.
Better support for grouping. If I'm playing a classical playlist, it should be able to shuffle by group/work, not just album (which holds a bunch of works) or song (which don't make much sense out of order).
Some limited song download grouping? For example, buy a 4 minute song from an album, and allow the user to download a 45 second segue track with it. Don't count tracks less than 1 minute towards the song total (and thus claiming an album has 10 tracks for $9.90). Anyway, something should be done about those little tracks so people aren't getting ripped off - for what little they're getting ripped off for I suppose.