For IPTV to be successful, it will need to solve some of the most common Pet Peeves of plain ordinary TV. My personal Pet Peeves include:
1) Bad channel search capabilities
2) Lousy and limited content
3) Unstable cable (VOD crashing, etc.)
4) Remote controls that are not powerful enough
5) Slowness of the interface, ugly interfaces, and clunky UI
6) Non-intuitive settings, confusing menus, etc.
7) Not child friendly
8) No personalization, no way to ulpoad content
9) Easy to use content filters (blocking porn, etc.)
10) No plug-and-play STB or easy set-up and maintenance
There are others, but I think some, or all, of these need to be fixed for IPTV to really be successful and differentiating. On quick glance, I believe 1, 2, 5, 6, 8 and 9 will be the easiest for IPTV to improve upon, if designed properly. The other challenges might take some more time, and may not be uniquely addressed by the capabilities of IPTV.