Well, a good part of my job is transforming a lot of Excel stuff in something more "strongly typed". So putting back a spreadsheet back in my application look at first like the opposite of my objective :-)

But on a UI concern only, why not. I could give a try to bring back some data analytic reporting functionality with an spreadsheet control so here are my "must have" features :

First above all, Charts. If possible with a better handling for auto Axis labeling than the ChartView control.

Second, Tables, with some databinding features. Something like a datagridview inside the spreadsheet. As far I as know, Excel could only work with external datasource in one-way scenario (could not update the database from Excel). Having this feature would add something to the spreadsheet that Excel can't do.

Of course I totally agree with the previous remarks from Jared and Trenton (maybe except the one about eliminating Excel for licensing economy, seriously go with openoffice if you just don't want to give your money to Microsoft).

Nested formulas of course; people been hooked on those since 1979 w/ visicalc :) 
 HLOOKUP, VLOOKUP, OFFSET, COLUMN(S), ROW(S), and other cell reference items; math functions, etc. (Full excel interoperability on functions would be required to have XLSX compatibility)

and .. if you could be so kind, one specific to .NET, invoke via reflection; e.g. 

=ADDRESSOF(_functionname(params))  which calls a user-built .NET function returning a variant. That would be hugely useful - far more powerful than VBA scripting support. This would allow the developer to extend the spreadsheet with custom programming (e.g. to look up scalars from a database call or n-tier business object)

(An alternative name for the function could be =INVOKE(methodname(params)) - this might avoid user confusion with =ADDRESS which is a standard function)

In VBA you build the function and call it simply by ={vbafunctionname{params}) but if you allowed .net reflection in such a way you could open up some really nasty holes (calling framework functions instead of spreadsheet functions accidentally). If a function were created specifically (e.g. =INVOKE()) then there would be no doubt you're calling a function via invoked reflection

Autosum, grouping, sort functionality, defined names (with a name manager UI?), data validation (dropdown component tied to a lookup table), cell protection functionality, and other general data manipulation aspects for the spreadsheet.

User control support would be nice with the option of either floating (such as excel graphs or wordart), or in-cell (for formatted data editors). 

Cell formatting should be as strong as any modern spreadsheet w/ support for data type formatting (decimal to x-precision, date, etc.)

I think that database binding should be left to the developer although binding data from a list of() would be a nice touch. Direct database binding is nice but it would be a beautiful thing if data could be sourced from a strongly typed business object (as reporting and all other telerik controls can do). That would allow developers to rapidly integrate spreadsheets based on already-designed business objects, such as a list of customers, invoices, or whatever. 

Auto-fill by dragging (aka Drag-Fill)
Copy-paste from another spreadsheet
Formulas
Cell Formatting/Highlighting based on data
Basic Excel-like functionality

Any update on this?  I'm currently trying to reinvent the wheel on duplicating a spreadsheet with multiple calculations and formulas.  I dove into this using the RadGridView and I think it is going to work but I'm guessing this control would have made this project much easier.  

Still waiting for this. We would like to have basic Excel-like functionality. Actually thought you'd got it done after installing the latest update; getting closer with the pivot grid stuff. :)

I see that RadSpreadsheet exists for WPF / Silverlight but our apps are WinForms.

Use case is eliminating Excel for end users in our document imaging deployments. Excel licenses are expensive; having basic spreadsheet functionality is a big value-add, especially for casual users who just use it for basic reporting.

Auto-fill like in excel would be handy for us.  

Any timeline on this control?

This would be very helpful as I need to at least display spreadsheets in my application.

Full spread sheet functionality will be nice, as I want to open a excel on a particular place in my application