Too bad I can't play since I don't have enough posts.  Maybe next time...

Having to download the entire chain also causes issues with new user acceptance.  I installed bitcoin on an older box I have and it took about 4 hours to download the entire chain.  As time goes on this is only going to get worse.  While this is a minor annoyance for most people here with fast connections and servers, if bitcoin were to actually get wider acceptance outside the tech circle it would be a deal breaker.

Say your neighbor wanted to buy something with bitcoins.  You tell him to install the program, then go to the exchange and buy some coins.  Sounds great, right?  How do you think he will feel about the transaction when he has to wait 8 hours after installing the program to get his bitcoins because he has to download a chain with 200,000 blocks?  Do you think he would recommend it to his friends?  To gain more widespread acceptance, initial transactions would need to overcome this factor.