"I think it would be more natural to have the "input" button cycle through the inputs"

By using the up/down arrows, a user is able to access the desired input a little quicker than if it were a one-button toggle.

For example, if you were in Video 1, but wanted to toggle back to DVD, you simply press "input" and then the "up arrow".

With a one button toggle, you'd be forced to go through all of the other inputs before arriving at DVD.

Best,

Scott