So it seems in order to change from weapon and shield to a spell you must use the fav menu to get the spell? Then again to go back to using shield.

Would been nicer if you could assign magic to the shoulder buttons.

This was way easier in Oblivion.

The shoulder buttons are used: L2 = sprint. R2 = Dragon shout. Left and right on the D-pad aren't used for anything though.
I miss the hotkeys from oblivion; I don't like pausing everytime I want to switch from fire to frost.

Yea thats what I mean, make use of all d-pads buttons and maybe hold right shoulder button to get a menu of different spells to quickly choose from instead of making it to shout/power only. Or improve control settings so you can change all buttons.

Left and right buttons can be used to hotkey potions and possibly other things. First you need to go to your inventory and "favouritse" the potion you want to use with the left/right. Then go into your favourite menu and go to the potion and keep holding either left or right on the D-pad. And then you have a whopping 2 hotkeys.

Thats nice. Does it work with spells or gear too?