Excel's core functionality is great, but many of its extended functions are hard to use and/or limited. In addition to adding functionality, you could revamp some of the functions that excel currently doesn't do well. My list would be:

1. Multi-user experience - Better workbook sharing and editing.

2. Better scripting (already mentioned above)

3. More than 65536 rows!

4. Queries/Lookups - It may be that I'm not proficient enough, but it seems like VLOOKUP and pivot tables can be done A LOT better.

FYI our old company was considering buying a product to extend excel functionality. Probably a possible competitor. Check it out: http://www.businessobjects.com/product/catalog/xcelsius/