Just read about the home-button thing from Joshua Topolsky. I think this would be a very nice addition to the iPhone. Apple knows that games are the nr1 software category on the iPhone, and the controls are still crippled for certain type of games (platformers, fps, etc)
If Apple turns the home-button into a macbook-like trackpad, the functionality would still be the same for older applications (the trackpad is pressable), but would also allow developers to have a dedicated, trackpad inputdevice, which can function as a joystick / d-pad.
It would be nice to have buttons outside of the screen. I’m not sure about the performance of the front-camera, but you could double the cam as an action-button. Also the volume buttons could be used, but I don’t think Apple would go that way. It’s a cluttered solution.