Seriously you guys lack imagination. I remember in 2005 when I suggested that existing phones where were crap and that large screen touchscreen phones would be successful people thought I was crazy. Now the same people are claiming there is no way to make a watch user friendly. The screen of the iWatch will be at least the size of an iPod nano, probably larger and wider like a shrunken iphone in landscape mode..
In addition to the obvious things like GPS, Siri, blutetooth, apps, and phone call response/averting like the ability to answer a call in speaker phone mode with a tap or gesture:
1. Always-on voice control -- if the toy R2D2 robot running on double A batteries can have it, why cant a modern device (it wont consume much power, it's listening only for a specific keyword(s)).? One of the keywords can be a distress codeword that can call 911 or help and activates (GPS) tracking. Note, Always-on voice control is different than Siri which requires you to press a button.
2. Tap anywhere, including on the outside of the strap to answer or silence the phone or to view the time. And an option to shake to silence. Default? Will have to test which works best (gestures or tap?). There will also be a cool setting which causes your iWatch to vibrate for a few seconds before the phone actually starts ringing .. this will allow you to silence your phone without being awkward.
3. Heart rate and other health or distress vital signs monitor. An IR camera and other sensors facing downwards at the skin will probably be the best way to implement this ... though the first versions can be electricity based.
4. Ability to quickly send a canned text or voice message when you cannot answer the phone -- Ideally the UI will allow for this even in darkness when you are in a movie theater.
5. A pulse system that allows people to send you basic text-style messages without you having to read it. For example, if you are in a meeting and your friend wants to tell you she's gotten home .. she can send a short vibration sequence -- kinda like Morse code. The phone will vibrate in a specific pattern first to tell you it's her message, and then it will vibrate out the message. Doesn't have to be vibration only .. any sort of touch/skin sense thing I suppose.
6. Finger gesture to text character/word as a keyboard substitute.
7. USB 3/lighting connector.
8. NFC
9. Seamless data sync/integration with phone and other devices.
10. buttonless slick design, face and bottom having a gentle curve to it.
The above features are what I would expect in the first edition, the second version should have a miniature camera, thumbprint recognition.
There are a few other features I don't want to list here because I know Apple is gonna snag 'em and patent these features. I don't mind the snagging I don't like the patenting. After all, I am not bitter that 2 years after I mentioned that a large touchscreen phone and voice UIs would sell really well .. they announced the iPhone. Proof: http://hardware.slashdot.org/comments.pl?sid=163341&cid=13644457 [slashdot.org]