Here's an interesting piece by David Greenberg, who does the history lesson feature for slate.com, on the presidential primary system. He contends that "instead of producing what you'd expect from democracy -- greater disagreement, difference and unpredictability -- the ascent of binding primaries has turned the pre-convention months into a dreary slog. After a flurry of excitement surrounding Iowa and New Hampshire, front-runners typically amass springtime victories like a college football team running up the score in the last quarter." I think 1968 was the last time a June primary had any impact on the outcome. This makes conventions, which used to contain a modicum of suspense (and therefore interest -- they were sort of like reality shows) into expensively produced but boring themed ads.
Greenberg doesn't think that the other states moving their primary dates up to within a week or two of the New Hampshire primary will do much to reduce the influence of Iowa and New Hampshire, two atypical states that have had an outsized impact on presidential primaries since the 1950s (New Hampshire) and the 1970s (Iowa). If anything, it might even magnify their impact, since there won't be much time for somebody who comes in third or fourth to mount a recovery in time to take other states.
I think Greenberg's stated expectation for what you might expect from a really vivid democracy is a little pie-in-the-sky, but his analysis of the current system is reasonably spot-on. How to improve it? I don't know. The French system -- an all-comers national election followed by a contest between the top two, whatever the party -- is intriguing to consider, but I suspect it would be resisted. The two major parties have a lot invested in the present system, even if it does induce boredom.
Howard Fineman of Newsweek has suggested (scroll almost to the bottom of this "Hardball" transcript, which also includes an interview with Goerge Tenet that is of some interest) that the two parties will choose their candidates very early under the present configuration, and then some in both parties will start to get "buyer's remorse," which could open the door for a well-financed third-party contendor. Trouble is, the most likely candidate is Bloomberg, who could finance himself, and he's the embodiment of a Republicrat rather than being ideologically distinctive from either party. Chuck Hagel, an Iraq war critic, has dropped hints that he'd be interested, but I don't know if he'd be viable.