As we see from this topic lots of different people have lots of different ideas as to what they want. I think the poll is the right approach and I will be interested to see you develop an actual project proposal from the suggestions and ideas herein. For me if it is "just" a retro-game player (IE for NES, SNES, etc.) I would want a small box with 2-4 controller ports (USB so we could use our PC logitech controllers, etc?) and an HDMI connector. The front end would just handle the SD card and I could load the games I want. Ideally targeting N64-PS1 as the high end of what it could reproduce.
This would be a great travel device for me as I'm the "retro gaming guy" amongst my friends, since I still have all my stuff from when I was a kid, but carting around a system, controllers, and a huge stack of cartridges is a pain in the ass.
I basically use my PC as described above right now but that also cost $1200 and does a lot of things besides having an instant-startup easy front end. Plus I don't really like to unplug it from my desktop setup to take to a friend's house.
If it is to play new game, I imagine something quite similar (ie a small box) that reads the games from SD card. But at this point we are getting dangerously close to OUYA territory. Being able to purchase and own the installers or games in the style of GOG and load them onto my own physical media would be very appealing to me. Then I could use my PC to build my own archive and not be dependent on this proposed console's network capabilities.
This kind of thing seems like a hobbyist unit that only might ever sell a few thousand devices. Even OUYA, which was arguably quite successful for what it was, was only selling a few thousand copies of its most popular games. The audience for this stuff is just not very big.