I am from Switzerland, and as you probably know we are not part of the EU partly because of it not being more federalized. One of the major points of critics is the Union being ruled from Brussels by bureaucrats. The main task of a union like the EU is, in my opinion, to give guidelines for legislation in its members. There should be no laws on unimportant, administrative issues made by the Union, as every member of it should be able to make laws according to its own needs inside the guidelines made by the EU.
The European Union could benefit a great deal if they adopted a more federalized approach. They would likely see a growth in both the social and economic areas of the people. We have seen that a federalized system in the states has been overall highly effective in the past years.
In some ways the European Union is a sad thing because it is tending toward erasing the wonderful distinctions between its various member countries. But if it is going to continue to be a union and function as one with any clout then it is going to have to develop a federalized government.
The European Union is not a collection of individual states but rather individual nations, some of which vary quite a bit on policy and government style. Nations join the European Union primarily for the financial benefits of a common currency and a stabilized economy. It is much easier to marry financial interests in which everyone theoretically benefits than policy, for which, inevitably, there must be compromises.
The countries of the EU are, in many ways (except for the languages) analogous to the states of the US at its inception. If there's one thing we've seen, its that federalization actually leads to further division within a body, as legislation is harder to pass without effectively bribing some members with other's tax dollars.
The European Union should not be more federalized. This would ultimately hurt them as a country and it is not needed at the present time. By placing more federalization into effect would limit there resources. I think they need to be left alone and will manage their budgets and citizens in the best conditions as they see fit.
A small conglomerate of bureaucrats (elected or not) trying to represent 700 million people of vastly different ethnic languages, histories, cultures etc... Is asking for a repeat of the Roman Empire. There is a reason why there was so many secession attempts, ethnic violence, and poor representation of the people. Because ONE government was trying to rule too many cultures to accurately represent. Besides, a government closest to the people is one that rules the best.
The same issue I am proposing here is happening in America already (well with some exceptions) too much power and too many interests are concentrated within the hands of a couple politicians. The people are poorly represented due to the sheer size of our country (that and rampant corporate influence). Certain regions of the United States are being dragged down by others. Again, a government closest to the people is one that rules the best.
I prefer to keep the EU as it is. Creating a common bond and stable economy without creating a poor democracy.
As a Brit I will obviously be focusing on the effects the EU has on Britain. In one word: awful. 70% of our laws are made abroad by unelected foreign bureaucrats. Because we aren't in the euro zone (Thank God!), we don't get an equal say and influence over the EU, despite the fact that Britain is the EU's third (soon to be second) biggest economy and is the third most populous EU state. No nation can be truly independent in the EU as it regulates everything and anything it can and member states cannot sign trade deals alone. Britain also contributes far more into the EU coffers than it gets out of them. It's a net loss of £55 million every day! I haven't even started on the open door immigration policy to the whole of Eastern Europe. If the EU is federalised, this will get even worse!