I prefer the watch more than the old folder screen. Adds a new feeling to the menu, not everything *has* to be like it was in the N64 in my opinon.
Maybe it would look good if it was fullscreen, with the "Find Server, Create Server,..." and all that in the tabs it had at the bottom of the screen, but maybe the center would look empty so not sure about that. Also, is it possible to make it animated and have the moving scan lines? That would be a good detail with the sound included.
At the top you could add "Q WATCH V4.3" or something like that, too.