All things considered, I can't think of much they could do to improve just Hammer on its own; most of the biggest limitations lie in the engine. Hammer is incredibly easy to use, largely at the expense of the engine being overly simplistic in some respects. Compare the brush-and-model... er, model to the way Unreal does it: the whole map is in effect a giant, complex model that receives real-time lighting, so every surface can be phong-shaded. Building a map in Unreal is more like 3D modeling; Hammer is more like a home design program or something.
My #1 request, though, would be the one I proposed back when we had our "How would you improve Hammer" thread: in the displacement editor, instead of clicking up and down buttons to move a node, you could just select it and drag it around like the way the vertex editor works. If you need more precise control, you could use a slider (similar to the one we have now) to change the scale of the "grid" that the dragging snaps to.