I was around when it was first introduced and it was awesome for it's time. But I think when Gaia got involved with other movie studios that saw movies like the Matrix come in, I think it might've been a mark that'd later do the thing in. Since, you know, licenses from big studios must cost a fortune to keep and maintain.
However, I did love the fact that the theater was used to showcase anime films and some shows. A theme I'd personally would like to see continue. It wouldn't even have to be just Anime, it could be a projection of all sorts of media. It could be used for user-submitted videos that are Gaia-approved. It could be used to host some contests through that, like users would submit videos for a certain contest that involves the theater.
That'd be some way to make it more useful than it's been.