You can choose any taxanomies and terms and post types and it will show posts from them.Ypou can also choose how many posts to show,show excerpt or no,excerpt length,read more text.Widget also support thumbnail,and if post haven`t thumbnail it will grab first image and create thumb from that.Thumbnail creation is by timthumb.
If you have suggestions for a new add-on, feel free to let me know about it on http://www.hmayaktigranyan.com .
This plugin sponsor is http://www.huridocs.org/