My take on it:
Suggested List Price: This will be a stopgap product until processor/receiver/PJ evolution grows enough inputs where people don't find themselves needing a switcher. As such, a switcher is a need, not a want or performance enhancement. So, since it's a need, minimize the pain, and hence minimize the price. Now about $200 seems like an early-adopters price point, less later, and then basically worthless as switchers aren't as needed (e.g. RCA audio switchers)
Physical Size and Appearance: Small and basic. Early adopters have nice equipment, so make sure it's not a black wart on a otherwise gleaming rack of audio jewels.
Number of Inputs / Outputs: Possibly a couple models of 2, 3, or 4 inputs, but 1 out should be fine. Mostly people need these to support a one-cable install.
Type (DVI, HDMI, Audio, etc) of Inputs / Outputs: Mix it up, offer various versions. Let the user configure and order what they need.
Type of Audio connectivity: See above
Ability to Scale resolution of Output signals: Don't see a need
Guaranteed to handle 1080p HDTV: 720p is the major size of the market, but in a couple years 1080p will be needed for most. So, it'd be smart to do 1080p from the start.
Cheers,
Chris