Hey, I signed up last month and so far I think its a cool service. I know you guys are in the middle of designing an update, so you've probably considered all of these, but I thought I'd just throw them all out there.
1 - Smart albums.
Be really cool to be able to assign tags to albums, and then any photo that matches those tags gets automatically put in that album. Eg: I assign the tags for all my friends names to a "Friends" album, then every time I upload a pic tagged "billy" it automatically gets added to that album.
2 - Smart Privacy/copyright
similar to 1. If i can add certain tags to a "private" list, and maybe others to CC lists then privacy/license could be sorted automatically.
This is mostly related to people. My girlfriend doesn't want any pics containing her to be public, so I could add her tag to a "make private" list. I don't mind my pics of buildings, landscapes, etc.. being CC-shared, but i figure pics with my mates in should probably be rights-reserved.
3 - People/place tags.
Similar to how Vimeo does it. Or facebook maybe. Allow you to assign a tag to a person. That person could be a member or an email address. that way they'd get updated whenever I added a pic with them in. And I'd get updated whenever they added a pic with me in. So people could see my pics on my profile, but also a link to "other people's pictures of soulgrind".
Assigning geo-tag coordinates to a tag would also be handy. I'm aware there is already something a bit like this, but it seems kinda techy so i haven't investigated.
4 - Pics from other accounts/feeds.
Be nice if subscriptions/profiles could subscribe to feeds from other photo sites, so they could show thumbnails on 23.
This is because I've migrated from flickr, but I still have a few friends and contacts on there. No idea how it'd work, but i think flickr has thumbnail rss feeds, at least for public pics.
5 - Need some software. Windows Live Photo Gallery
I just discovered the free Windows Live Photo Gallery download from Microsoft, and much to my MS-hating surprise its awesome, better than picasa in many ways, especially for tagging. They have an API to add services for easy upload. No idea how tricky it would be to implement it, but it'd be well worth a look. Be a good way to get noticed too.
http://get.live.com/photogallery/overview
6 - Dark CSS style.
I've been messing with the custom CSS (cool feature to have, BTW) but its a real pain changing everything to the dark style I wanted. (i put a post in the custom css group, but no one answered). A few more predefined styles as starting points would be nice.
7 - Styles/headers gallery.
Several people have made nice style sheets and cool graphical headers.. be nice if there was a "user styles gallery" to allow people to easily share and use them. I'd be happy to design a few headers, etc.. and add them to such a gallery. (if i could just sort out the css for the sidebar!)
8 - Facebook integration.
Not important to me, but would help with marketing.
If you could find a way to link tags to facebook contacts that'd make it useful.
9 - less tables, more CSS. ;-)
I'd guess you know this, but redoing the site using more CSS for layout might improve a few things, and definitely would make custom CSS easier.