No disrespect intended towards Matt and crew. :)
If you want to compete against WP.com, I would lean towards a few features.
- Themes. A large number of them and of different types. WP.com has something like 2 dozen IIRC. And maybe some repeats within those themes. (ie Wheatgrass with a sidebar on single pages and without it.)
- Widgets. WP.com seems to only have a few of them installed. Not even all of the ones that come with the normal MU install.
- Space. 25 megs really isn't that much but I would think it would be for most people. Promote 50 megs or something like that. Not everybody is going to use it all of course.
- Support. Get a well written FAQ and reply to questions posted to your support forums. (And, no, I don't want to moderate another forum. Something like 19 now. :)
I'm really torn on the Site Wide tag system. When this rolled out, there was a fair amount of disagreement within the WP.com forums when this rolled out. I for myself don't like it but I can see where others would.
Hope this helps,
-drmike