What do we really want from better A.I.?

I have been thinking about AI in games. It's a subject that is being brought up a lot lately because of the new consoles coming out this year.

People say they want better AI but what do they actually mean?

Does anyone have any examples of current problems they seen in games, things that they would like to see changed going forward?

Do we want every enemy to dive away from our grenades or throw them back constantly? Do we want to be able to actually see an enemy miss when they fire a weapon? Should everyone seem smart or should there be a varying level of competency? Do smart enemies even make for better games? Should computer controlled partners clean house or leave the killing to you?

If we could really make enemies seem that much smarter, could we get through a game with far fewer enemy encounters but instead just more meaningful ones?

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