To continue, iTunes' biggest problem is simply that it tries/has to do too many things. I definitely think the best solution would be to break it up into separate apps, continuing the trend that Apple has already established:
• Photos.app: Syncs photos and personal videos with iOS/iCloud and manages the photo library that other apps can access.
• Books.app: Syncs books with iOS/iCloud, shows the iBookStore, and it should also manage a books and PDF library for other apps to access.
• Music.app: Should sync music and other audio files with iOS/iCloud, show the iTunes music store, and manage the music library for other apps (as iTunes now does).
• TV.app: Should sync TV shows, movies, and other video files with iOS, and show the iTunes video store.
• Sync.app: To handle syncing and backups of your iOS devices, accessing the photos/video/books libraries that are managed by the other apps. It could be called Backup.app, or even just be made part of the Time Machine Preferences panel.
• iTunes.app could become a thin launcher stub that just provides a menu for the Photos/Music/TV/Books/Sync apps.