What a depressing site this has become.
Even if the idea of a smartwatch turns out to be not very viable in the end, generating all kinds of ideas for it should be fun. Instead 'smart-ass' useless comments dominate here.
First, it could be beautiful, and adaptable to your own taste.
There is the silent alert function, you feel something and look at your watch. Fast and natural.
Then, there is the sensor platform, for sports and exercising, like the Nike FuelBand, but all kinds of sensors can be imagined. With Bluetooth, it might even download/upload data (even time/location/internet) from/to a nearby device such as a phone or camera, for direct display or as an input.
It could be an app platform. Anyone could come up with useful or fun applications.
It could act as a key/passcode or remote or wallet or NFC device
It could trigger a SOS with the right touch-gesture.
There are endless possibilities, and only one needs to be a killer-feature to make it another must-have breakthrough device. Apple could throw a few hundred million at it, and it would be a good gamble. If only to develop the creative potential in the company. Probably, it already has done so. It's fun to work there, I guess.