Couple of problems as I see them.
Compatibility - The system was designed to run only the games that are in the compilation. Compatibility with other games is very low so far, especially games with fast loaders.
Stick - The joystick sucks. When I mod mine I'm going to swap out the stick with another stick and some better quality buttons.
Case - with the mods (flash, etc.) being developed, it's going to need a new case/power source (needed for the keyboard already). Finding a suitable project box that doesn't make the entire system bigger than a normal C64 is the challenge.