I guess the easiest thing to do would be to take this point by point.
To be able to scan UPC's to enter the books and have the book information pulled off the Internet.
Delicious Library has this pretty well covered.
Print UPC's for duplicate books and books that don't have a working UPC.
Delicious Library does not print barcodes, but there are plenty of free barcode printing programs out there and, once you have a barcode, you can enter the number into Delicious Library such that scanning it will jump to the book, just like books with commercial barcodes.
This is exactly what Delicious Library does. I'm not entirely sure why they think Delicious Library doesn't track loans and borrowers. Certainly it's not optimized for dealing with hundreds of borrowers, but that doesn't make it unusable for that purpose.
Be able to look up whether a book is available or whether it's checked out.
This is also something Delicious Library already does. You can see that a book is checked out from any shelf, or see which books a borrower has from that borrower.
Be able to print a list of overdue books and patron information.
This will get easier in Delicious Library 2, but it's certainly possible now. For an example of what I mean, check out my post on using AppleScript to generate a list of titles.
Would like to be able to send an email for overdue books to those patrons from the program.
I assume they mean they'd like this to happen automatically, because you can pretty well do this now. Sure, the default text is a recommendation, but nothing prevents you from editing the email to say "hey deadbeat, return my book." You could also use AppleScript for this.
Needs to be user friendly enough that volunteers would be able to check-out books using a scanner and typing in the patron's name/library number.
So, yeah, you can't scan to jump to a person's record, though you can select the borrower's list then type that person's name to jump to them, just like with any other list. This is that whole "not optimized to deal with hundreds of borrower's thing.
Would like to be able to type in the word "sheep" (for example) and have it list books we have which have to do with sheep. Or, books dealing with blended families.
Yep, we do this, both in the program, and with Spotlight.
Would like to be able to get books suggestions - such as if someone had read Alice in Wonderland, what other books might they like. Delicious Library sort of does that.
We sort of do that like the pope is sort of religious.
So, to sum up, Delicious Library 2 will improve some of this stuff, but I suspect with a little bit of effort (and maybe a bit more exploration) you could accomplish all this in the current version.
If you have any specific yucks I might be able to give you more detailed suggestions.