improved hardware and software
I'd have to say it needs it.
I've raved about my PRS300 in the past, and I do like it for its size and battery life and a decent display, but whoever designed it never tried using it one handed, and never thought about feedback for button actions.
There are too many occasions where it does something unexpected - e.g. returning to life after recharging, it backspaces to 'book by author' rather than the 'by collection' in which I left it.
It has no way of listing hierarchically beyond one level deep, and that only in 'collections' - alphabetical listing doesn't list by author and then having selected an author, by title; instead, it lists everything by that author, and then everything by the next author, and so on - potentially four or five hundred books in a long list. Tough if you're looking for Zelazny at ten books every two seconds...
It's inconsistent in its interface - sometimes the centre button is required to select, sometimes a number button is required. Sometimes the left arrow takes you left, sometimes you need the goback button instead.
You can't use it while its charging, and you can't charge it except on a live computer or a dedicated (not-included) charger.
I could go in. But instead - did I mention how much I like the battery life? And the display? And the small size? And the fact that I can use Calibre to dump books to it sans DRM pollution? And the battery life?