The ability to schedule reports to be distributed in email was a very, very welcome feature that came out quite awhile ago. We use it to send a variety of reports to our executives who rarely use Salesforce, yet want to see the Salesforce data.
The problem? The reports form the basis of their perception of the Salesforce software and the reports look lousy when received in an email.
There's loads of ideas already posted on specific areas that people want to see improved. I don't want to provide a specific solution, only the request to review all the ideas, add your own, and revamp this much used feature. There's also multiple Appexchange partners who provide solutions, but this should be standard functionality.
One thing to be sure to maintain please, is the link to easily navigate to the report. I LOVE that feature and is what I encourage people to use whenever they complain about how hard it is to read the report information from their email.