There are plenty of usability improvements to the Craigslist UI that have nothing to do with adding "annoying banner ads" or a login screen. For example, suppose you're looking for apartments on Craigslist. Suppose I want to find all the apartments near a certain location. Craigslist lets me search/filter by city and by neighborhood, but that's about as granular as it goes: there's no way to say "show me apartments near address X", as far as I know.
The reflexive response to comments about Craigslist is always "you don't get the Craiglist ethos", but IMHO they aren't exactly the epitomy of good UI design, either.
he DOES want to do more with craigslist. he talked about this in an interview with Charlie Rose. he said that craigslist is focused on very basic needs -- finding a job, finding a place to live, etc. he wants to extend that to bigger and better things. doing that is hard and it takes time.