The problem with Home is that it's not bold enough to get people to have to use it, and it's not attractive enough to get people to want to use it. The whole thing lacks a true purpose. If you have to ask, "Why does Home even exist" it would probably be hard coming up with an answer. It's halfway between a social network and an purposeless MMO. Here's what I would do to fix Home.
1. Home is mandatory. You turn on your PS3 and you are in Home. No more themes, no more traditional XMB. You will have a pull up menu to get anywhere you need to just like the XMB provided.
2. Home will have to drop the insane loading times. Every area should be downloaded into your system as you first enter them, and that is it. Near instant transition from area to area. Anyone that wants to continue streaming the areas can opt out of DLing them, but the option should be there.
3. Everything that can be done in Home can be done in one of two ways, through menu or through avatar movement. Every environment can be walked to or you can be instantly put there through a menu selection. All Home games you can walk to or they can be selected through menu. Every person you can walk up and chat to, or you can go into a traditional chat room setting for every room where everyone can talk to eachother.
4. Have more functions in Home for human interaction. As far as I know, you can dance. That is largely pointless. How about gifting, hugs, flirting, etc. like Facebook? Find a way to attract a female audience, because that is how a social network takes off. Men will come if women are there, just like ladie's night.
5. Have privacy functions to only see your friends if you feel like it. Everyone else can see a translucent ghost of you moving but can't interact with, unless you leave a traditional message in their PM box and ask to be their friend. Privacy is very important to some people, and getting harassed even virtually is not something they enjoy.
6. Most games in Home should be social experiences. They should bring the community together like Mob Wars and Farmville do on Facebook and MySpace. A social network should not be concerned with providing single player minigames. It defeats the purpose.
7. Every PS3 game ever should have a simple room with the cover art on the wall and a poster board on another wall. These rooms can be accessed through menu only and you'll have the option to DL them or stream them. The poster board is to leave any notes about the game you want. Have some niche title like Armored Core 4 and having a tough time finding people for multiplayer? Go to the room and leave a message on the board that you play the game and let others interested that show up in the room befriend you. Or just say something about the game itself. Whatever floats your boat.
8. Regarding the movie theatres, every PS3 owner should have their own. I would like if they had something similar to Xbox Live's Movie Party where you can all watch a movie together. However, on PS3 it will be only with Sony's movie store downloads. You can set up a private or public invite for people to watch the movie with you and will host it. The reason I limit it to Sony Store downloads is that Sony can't open themselves to allowing people to stream their illegally downloaded films that are thrown onto the HD. You set up a time, and an invite and people can hop on in and watch something you own. There can be a whole setup where everyone's movie parties are on a list and you can pick and choose, sorting between genre, private, public, etc.
I probably have more, but that's a good start. Home in it's current form is a poor excuse for a social network. It could be more.