I would really love to see some more levels to the blocking system! It would be rad to have some kind of "softblocking" feature where you can block people's posts but they can still post in your threads, ping you, don't get a message that they're blocked, etc.; basically a milder version of blocking to allow you some peace of mind! Like, I run a lot of forum games and other threads, so if I ever block someone then they'd suddenly be unable to post in any of those threads and it'd be immediately obvious that I blocked them. Aside from not wanting that to be so blatant so as not to prompt any vagueing or drama on- or off-site, just because I'm uncomfortable with someone or have personal issues with them doesn't necessarily mean I'd want them to be unable to participate in the threads I made!
I've heard of people blocking users just because their avatars bug them, too, so I think for really a lot of reasons it would be useful if there was a way to hide a given user's posts from your view without having to resort to full-on blocking them! The current blocking system is awesome for if you really want someone far away from you and totally cut off from you, but I think there are a lot of cases where someone's reasons for blocking aren't so severe or where they'd feel really unsafe the person they blocked found out about it!