The M5 brakes are more than adequate for street driving - in an emergency stop they are 100% up to the task and the car stops amazingly fast and short - better than any other car in its class.
The track is an entirely different situation. Think "emergency stop" immediately followed by full-throttle acceleration to some speed north of 100mph (which in the M5 doesn't take long at all), and then doing another emergency stop, over and over. THIS is where the heat becomes a problem. don't forget this is a 4000lb car with the engine in the front - together with weight transfer during braking this means the front brakes have a HUGE job.
Cross-drilled rotors do not shed heat better. My understanding is that their purpose is to vent gasses that build up and reduce the braking effect. Another benefit of cross-drilled rotors is reduction of rotational intertia. Slotted rotors do the same thing. I can't answer as to why we don't have them, but I don't think they are the primary problem in our cars, which is immense heat buildup. The solution is better cooling, and pads and fluid designed for higher temps. Pads like this tend to squeak more and are more abraisve - there is no free lunch. cross drilled rotors must have every hole chamfered, and must be properly heat-treated/annealed AFTER the holes are put in - or you have nothing but stress risers where cracks will start and then propagate. (After my last outing on the track even my Porsche developed this - albeait to a very minor degree.) So such rotors are expensive.
In the end - I agree with your assertion - on such a great car, they shoujld have made the brake system more capable of withstanding aggressive track driving. My point is only that cross-drilling probably isn't the place to start.
if you have not read this article yet, it is on my top ten list of "must read" articles - the best, most b.s.-free article on brakes I've ever read, from one of the true elder statesmen of racing, Caroll Smith:
The "Warped" Brake Disc and Other Myths of the Braking System
Note - I am generally skeptical of articles like this when they appear on a manufacturer's web site - in this case, StopTech - but because I know who Smith is, and that he is not affiliated with them (even though he may have been payed to write it) I trust the article, and I have a lot of respect for stoptech for putting it there.