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My personal pet hate having gone from iPhone to Android and now owning an iPod Touch: re-entering in my password all the damn time. Especially when it's a free app.

Fix that and I'll be a very happy man.

Allow me to disagree. Apple is doing the right thing asking the user confirmation for installing apps. Better safe than sorry.
Confirmation doesn't necessarily require password input.
As the father of a talented 3 year old: yes it does.
If clever children are the main argument against not requiring password confirmation, it sounds like "always require password on purchase" could be a great Parental Controls toggle.
What if your kid downloads an app that tracks your location constantly? Should apple make you enter your password when the app asks for permission?
Android Market / Play solves this by letting you set a PIN that's required to make purchases (which does not include Free app installs). It seems like a good compromise.
As nupark2 says, the password doesn't have to be involved. It's tempting me to change my password to something as short and simple as possible, which is pretty much the opposite of what I should be doing.
The android market (oops, i mean Play) has an option to require entering a PIN before a purchase is made.
The CSS on that page, specifically the block alignment, brings a tear to my eye.
A happy tear, or a sad tear?
This drove me to check the CSS for myself. I'm tearing up as well, now.
I'm really hoping that the acquisition of chomp will set things straight(er). I have to hope it's for the purposes of "yelpifying" the process of searching, reviewing, etc.
Basically, Ping for apps. As a developer/ misv in the app store I am not adverse to this idea but do feel the trepidation to its implementation. Keywords are really enough for right now and there is a major reduction in the crapps which in the past ruined customer expectations. In a nutshell, things are good and even improving so please don't break things, Apple (if you're reading)
My biggest gripe with the App Store (both iOS and Mac App Stores) is that you can't sort what you see by downloads, ratings, or other metrics. There's no granularity with the way the user sifts through the App Store, just what Apple deems to be the "Top ___" with whatever secret sauce algorithm they use. The current method of app discovery is great for the average user, but for a power user/developer like myself it leaves much to be desired.
They did buy Chomp, so they are probably trying something
It's not just the App Store, it's iTunes as well.

After buying the new iPad, one of the first things I did was browse the available movies to look for a 1080p one. I literally had to open the details for each film, scroll to the bottom to find the small print which said what resolution the HD was. The vast majority wee only 720p, and a lot simply didn't mention resolution, leaving me to make a guess based on file size.

There are also serious categorisation shortcomings for movies and films. Basically, I think Apple's entire suite for selling digital content and apps needs to be fundamentally restructured to aid intelligent discoverability. They simply have too many products for the current method of basic homepage merchandising and bestsellers lists.

All I want in the App Store 2.0 model (and I realize I will never get this) is the ability to submit a web application to be included in the store.
There is PhoneGap...
Yes, I've looked at PhoneGap before and it looks like a great tool. Unfortunately our needs (or our customers) involve using an existing web app but wanting the ability to find that app in the app store. Our solution has been to create small wrappers utilizing UIWebView but that is far from ideal! It appears that PhoneGap is mainly a platform for building apps using html/js, not for creating wrappers around existing web sites (but I could be wrong).
It's perfectly possible to either point PhoneGap's webview to your website or load parts of it dynamically, either with XHR from JS or with native code.
"1. An easy way to see what apps my friends are using and enjoying"

Game Center does this for games, which is the use case he was specifically asking about. You dont even have to leave Game Center to read about and download your friend's game.

"2. Ability to create 'playlists' and share them with friends"

I've emailed lists of my favorite apps to friends. Not sure if I would maintain and vote on a playlist though.

"3. Subscriptions to developers and push notifications to my device when they have released a new game"

Smart developers already let you know about their new games by sending you messages in their games that you are currently playing.

"4. Multiple categories for popular apps, such as 'Popular Today,' 'Popular This Month' and 'Popular All-Time'

Seems reasonable, but it is just adding more lists to navigate in the already cluttered App Store.

There are 5 main sections, and lots of sub lists:

* Featured (New, What's Hot, Genius)

* Categories (22 x [Top paid, top free, release date])

* Top 25 (Top Paid, Top Free, Top Grossing)

* Search (N/A)

* Updates (updates, purchased, not-on-this-device)

"5. Saving games to a wishlist"

Could be useful if it had a social component. Like if a grandma could get the app their kid wanted. Maybe?

"6. A Sale category that shows which games are currently discounted from their normal cost"

This would get gamed.

I really want Apple to move the games out of the App Store and into a separate Game Store. As someone that's frequently NOT looking for games it's hard to find good apps because so many of the top spots are taken by games.
My main 'wtf' moment with the app store is that you pay for something, and then you get to see if it's any good, and God help you if it's a borderline scam with no reviews yet. Yes, many developers release a 'lite/free' version and a 'normal/pro/plus/paid/hd/etc' version - these are crappy bandages for an inherent problem.

Apple: you control the OS. The store. The hardware. Would it really be so hard to offer X-day demos of the full version of a paid app? Some of them are absolute crap, but nobody has any idea until 50-some curious people buy it and rank it into oblivion, with no (practical) way to get their money back. You could do it without requiring apps to write different code, or bloat your store with multiple versions (which also break apart the ratings). Just lock / delete it after the time is up.