Microsoft has already quashed rumors of a redesigned, slimmer Xbox 360 for this fall, but not before gamers—myself included—began dreaming up wish lists for the non-existent (for now, at least) new console.

Rumors of an Xbox "520"—basically a half-step between the Xbox 360 and, say, the next-next gen console, the 720—have been circulating for...well, just about as long as the 360's been out.

This time around, TG Daily reported that it heard whispers of a "mid-cycle" refresh of the Xbox 360—which might include a slimmer design, a la the slim PlayStation 2—set for fall 2009. The rumors coincide with word that new, 65-nanometer graphics chips for the Xbox (smaller and cooler than the current 90nm 360 GPUs) are rolling off assembly lines.

Microsoft quickly denied the "Xbox 540" rumors, saying it has "no plans" for a new console this year.

But we can dream, can't we? Indeed, the Xbox 360 in particular is in sore need of a hardware redesign, given its sky-high failure rate, noisy cooling fans, and the like. Here's what would make me cough up the cash for a hypothetical Xbox 540 (these are all hardware changes, mind you, not software updates):

Better cooling system: Overheating seems to be the main bringer of the Red Ring of Death—the dreaded ring of red light that signals a major hardware failure. The upcoming 65nm graphics chips for the 360 should go a long way toward keeping new consoles cool, but a top-to-bottom redesign of the entire cooling system is also in order. Which brings us to...

Quieter cooling fans and optical drives: The Xbox 360 must be one of the loudest gadgets I've ever owned (well, the 20-pound, 4MB hard drive my dad bought in the mid-80s might take the cake). After spending some time with my relatively whisper-quiet PS3, I'd gladly fork over more cash for an Xbox that doesn't roar like a jet engine, especially when the DVD drive is spinning. And that reminds me...

A slot-loading optical drive: Again, I've been pretty happy with the slot-loading drive on the PS3—why not one for the Xbox 360 (er, 540)? It would definitely be a step up from the flimsy DVD tray in the current model, which tends to get jammed in the closed position. And speaking of optical drives...

A built-in Blu-ray drive: This one will probably have to wait for the Xbox 720, circa 2012 or so, but still, it would be a nice touch.

Built-in Wi-Fi: From the start, Microsoft's $100, snap-on wireless adapter seemed like a rip-off. Just build Wi-Fi into the console and be done with it.

Slimmer design...maybe: I guess it would be nice, but frankly, I'd happily trade a slimmer console for all the points I just mentioned, especially since overheating has been such a thorn in the 360's side.

So that's my "top 5" in the Xbox hardware wish-list department. What about you—what new hardware features would you like to see in an Xbox 540?

Related:
Microsoft Denies Slimmer Xbox 360 [Gizmodo]