Congrats to the Zotero team on putting together a fantastic application. In the past, I had been collecting references via Zotero and then importing them into Endnote for use in Word, but I just wrote my first major document with Zotero alone. Overall it worked pretty well, but here are the issues I ran into:
1) Duplicate records became a pain. Just a duplication alert when adding references would be sufficient to prevent most of these.
2) I had some stability issues in Word 2007, where things seemed to freeze up for a while.
3) Screen did not refresh in word after inserting a reference. Had to scroll down and then back up.
4) Sometimes the same citation would be inserted differently in different locations- showing different #'s of authors. But the ability to manually edit the appearance of a citation was very useful!

Features I really look forward to:
1) citation editor (although it is very nice than many are already available).
2) citation previewer so you can see what all of these formats look like. Even just having them on the 'styles' page would be helpful.
3) the planned server/citation sharing capabilities. I have found it very useful in the past to pull out Endnote references that are embedded in a Word document.

Thanks again!
Jeff