Ok I'm going to start this off easy
1: Gender Identity is a SELF identity. People should not have a gender identity forced on them that is not the one they use.
2: There is more than just Male and Female. Other identities might include: Intersex, bi-gender, and a-gender. Transgender is not a gender identity in and of itself.
And on to the more technical points
3: When designing systems do not consider gender to be a fixed field for a person. And for that matter remember that names are not fixed either. Also keep in mind that a persons REAL name and their legal name might not be the same
4: In the parts of the system that allow for the update of other personal information, allow for name and gender to be changed.
and on the business process side
5: don't make the requirements for changing a gender marker too restrictive. And especially do NOT require proof of surgery before making a change.
And now I will state for the record that I AM transgender. Documentation changes are one of the biggest hurdles that we face. BTW slashdot will not allow for changing user names, i would like to keep my 5 digit it, but move away from my old masculine sounding username.