Forgive my rudery in skipping the pleasantries but I know that your time is precious, even if mine is less so, and it is best to avoid flabby comment and cut to the chase.
Fix the freaking toolbar and then start innovating again.
Yes, I know you guys have been working on some very sexy features in the main site. And yes, I know the toolbar benefits from that semi-directly. But still, the toolbar is a major asset for you. It drives usage of A9 search, which is only ranked 27th in the US. Fix the toolbar and the main site will benefit.
Here are a few ideas for you:
1. Make the toolbar work with Firefox 1.5. You moved heaven and earth to port the IE toolbar to firefox. Now it is incompatible. I am forced to use IE to get access to my A9 bookmarks, and you KNOW how annoyed that makes me
2. Add a 'blog this' facility....
(a) 'Blog this site/blog this page' which creates a thumbnail of the site/page for the user to save to their host. Or offer a generic thumbnail from Alexa. The latter is simpler, the former is cooler.
(b) 'Blog this text' where the user highlights the text and hits the button. The text becomes the basis of the post and is linked back to the original location.
(c) Full configurability for 'blog this'. A user can have multiple blogs and mulitple post types within a blog. Keep a simple vanilla style as the default option, but allow full xhtml/css editing for advanced users
3. Complete the circle with Alexa. You use Alexa webstats on both the toolbar and the search site, and siteinfo.xml is smart, but you don't allow rating of sites. Users can write a review on Alexa/Amazon, but who is ever going to bother? Allow a simple rating of sites from the toolbar - one to five stars. Use the star rating to provide 'people who like this site also like...' type recommendations in the siteinfo dropdown (and on the main search site)
4. Implement site tagging or (preferrably) integrate del.icio.us
5. Drag and drop - get it working in IE then extend the feature so that users can drag to the search box
6. Implement favicons in the bookmarks menu
7. Enable export of bookmarks to the browser or to a text file
8. Create a 'mail this page to a friend' feature. The user finds a cool site and hits the button to mail it to a friend. This has been on Amazon for years and is a logical feature for the toolbar. Allow pre-configuration of 'friends' to make it a one-click process.
If you need any other ideas, I will work for lattes. Now get to work!