IMO the medal system in X1 is pretty much the best it could be. It's like a mini achievement system for each soldier, that while giving a small bonus, isn't something that you're forced to grind to play optimally. It adds more flavor then anything else. I'd like to see it expanded a bit with maybe some more harder to get ones, like 5 kills in a single mission, or weapon class (snipers, shotguns, pistols) specific medals.
As a side note, I know the memorial wall was a CE feature, but if it makes a return in X2 in the base game it would be nice to see any medals earned by soldiers displayed by their name.