Shanman, though I posted kidding around, definitely try the original layout. The Reverse button goes a long way to making the game.
PColson... Keep playing. I think Defender might be the toughest game to make the leap from frustrating to fun. When it does get fun, you will be amazed at the depth of play. I boggle that this game came out in 81 with such a unique mix of offense, defense and varied enemies. When you compare it to other games of its era, nothing is even close in depth.
You'll start to see cool stuff at Wave 3. Thats when enemies start warping away to prevent overloading the processor (the emulation in this vs. the real thing is excellent). You'll also find tricks like smart bombing multiple pods will slow the game down so much that you'll be able to get Landers picking up humanoids from a much greater range. The game slows down, but your ship doesn't.
This trick will also let humanoids drop from normal sure death heights and survive because they fall slow.
One of the coolest things I see on a pretty regular basis is that around the 5th Wave or so, sometimes things get so busy that a Lander will carry a humanoid up through the top of the screen and start over at the bottom. The original hardware is apparently so overwhelmed that it skips the mutation.
Its all glitches, but it's just so cool to see that crazy stuff happen while you're playing.