New Features

• HD 1080p video mode support over VGA and component cables. (Removes that PS3 differentiating factor)
• Xbox 360 HD DVD Player support. (Of course)
• Stream WMV video from a Windows PC running Windows Media Player 11, Zune software, or Windows Media Connect.
• Play video from storage devices such as USB flash drives, Xbox 360 Memory Units, etc.
• Play video from CD or DVD data discs. (Nice!)
• Xbox 360 Wireless Headset support, including battery level indicator in the Xbox Guide. (OK, but I'd rather a visual indicator on my controller, too -- like my quadrant on the ring light being yellow when the headset is muted.)
• Video support for 50 Hz HDTV modes (DVD and HD DVD only).
• Xbox 360 Wireless Racing Wheel support. (Duh)
• Set up automatic downloads of newly released Xbox Live Arcade trial games. (I'm actually more excited about this than I thought I would be; good usability add, and a great nod to them paying attention to the success of Xbox Live Arcade)
• Support for upcoming release of XNA Game Studio Express (separate download and subscription required.) (I am so going to leverage this, if I can get some current IP holders to give me permission)
• Stream music, pictures and video from a Zune device. (Again, why not from the Internet, too?)

Xbox Live Arcade

• Lightning-fast enumeration and listing of all Xbox Live® Arcade games on the console. (It's true)
• Find games quickly with two new sort options: Recently Played and By Category. (Another needed usability improvement)
• Have all new Xbox Live Arcade games at the ready with auto downloads. Auto downloads optionally adds newly released trial versions of games to active downloads when you enter Xbox Live Arcade. (Ooh, list the same feature in multiple places, so you can make it look like you have a larger feature set in this release!)
• View full achievement info in Xbox Live Arcade, including icons, achievement point details, and descriptions.
• Friends leaderboard: Compare yourself with friends and view leaderboard details right from the Xbox dashboard.
• Tell a friend: Send a message to a friend about your newest favorite Xbox Live Arcade game.

DVD Player

• Optionally disable notifications from Xbox Live while watching DVD movies. (Finally! How about adding that when I'm watching TV piped from my Windows XP Media Center Edition PC?)
• Improved support for audio streams on incorrectly authored DVDs.
• Better handling of unreadable discs. (Very cool; more playability out of discs that were previously SOL)
• Updated count-down timer.
• HD DVD player support. (Just because you list it more than once doesn't make it cooler)
• Added zoom support for non-anamorphic content. (Good, basic DVD feature added to enhance the Xbox 360 as a DVD player; smart)
• Added support to Family Settings to block Unrated Content (Smart, and fits into their new "Family Protection" effort; however, they implemented this badly in the Windows Media Player 11 beta, and it blocked all of my content -- inlcuding cartoons -- and not just the DOAX2 cartoons ;-) !)

Video Player

• Improved support for extended all black scenes in WMV content.
• Added support for Windows Media Video 9 Advanced profile video.
• Screen saver now becomes active when videos are paused. (Good for plasma TV owners)
• Now shares UI and player controls with DVD player. (Much more integrated experience)
• Improved video playback while downloading from Xbox Live. (Needed bug fix)
• Added skip controls (forward approx. 30 seconds, back approx. 7 seconds). (This rocks! Being a ReplayTV owner, I was jonesing for this functionality)
• Improved messaging around unplayable video content. ("Why" is always good ...)
• Added time elapsed and time remaining displays. (Again, additions that make the Xbox 360 a more full-featured replacement media device)
• Improved playback of high bit-rate HD content on fragmented hard drives. (My Xbox 360 hard drive seems to be acting fragmented, so this is welcome; but how about adding a defrag tool, yo?)
• Improved visual quality of video playback.
• Added selectable display modes: default and letterbox zoom.

Localization

• New locale setting for China
• Improved German translations in console settings.
• Improved German translations in memory area.
• Improved Japanese translations in Family Settings.
• Added localized text for all supported languages in pictures area
• Improved Spanish translations in camera effects.
• Improved locale-specific decimal denominators.
• Added localization support for title menu and main menu in the DVD player.
• Added localization support for “Attempting to Read Media” system message.

Memory Area

• Added support for Xbox 360 HD DVD Player content.
• Added new page for viewing content size by category. (Much easier for determining "bigger bang for the buck" as I'm trying to free up room on the undersized hard drive)

Other System Improvements

• Updated support for new Daylight Savings changes coming in 2007. (Wow; somebody's being proactive)
• Improved support for games to better handle host migration in multi-player matches. (I think this is better handling of "Switch the party leader"; won't likely benefit Halo 2, but I'm hoping Xbox 360-native games benefit)
• Improved Xbox Live Vision camera support for changing room lighting while zooming. (Catching up with the Logitech PC cameras)
• Background downloaded videos appear in video area (Good feature)
• Improved Xbox Live Vision camera support while using VGA.
• Playing photo slideshows from PC now maintains picture folder hierarchy. (I didn't know this was missing, but that would have pissed me off)
• Improved user experience when playing and deleting videos from the Games or Media areas. (I need to see what this is -- I'm hoping it's a consistent experience to be able to play or delete from either place)
• Improved handling of invalid characters during Xbox Live signup.
• Better handling of watermarks in gamer cards.
• Improved text for Windows Media Connect. (Yay! No more "I remember what this is supposed to say...")
• Improved UI performance in Media Center Extender (Gonna check this out, too, since I used this feature heavily)
• Improved connection support for Buffalo WZR-G108 wireless router when using Xbox 360 Wireless Adapter. (Interesting; they in bed with Bufalo somewhere? Seems like Linksys/D-Link/Netgear would be bigger focuses)
• Redownload of deleted Arcade Games no longer re-enumerates all games on the Arcade page.
• Improved visual display of text in themes. (Might make some previously unusable themes usable)
• Improved support for CD playback after signing up for Xbox Live and losing network connectivity.
• Improved support for long names of items memory area.
• Improved handling of gamer pictures downloaded from Xbox Live.
• Improved background download notifications when downloading many small items from Xbox Live. (Less annoying)
• Improved support for custom backgrounds after returning to the Xbox Dashboard from the Account Management area.
• Improved network reliability between Windows Media Center Extender on Windows Vista and Xbox 360 consoles using Xbox 360 Wireless Adapter. (Good; once (if) I upgrade my PC)
• Improved voice chat quality in Xbox Dashboard and in-game chats. (So, we can actually understand what's said?)
• Improved messaging when failing to connect to Windows Media Center Extender. (That would make me curse less)
• Improved USB keyboard support when using a USB hub.
• Improved consistency of user experience when deleting various types of content.
• Improved handling of low storage space for background downloads.
• Improved handling of Picture streaming from attached Digital Cameras over MTP protocol
• Improved error messaging for optional iPod support download when storage devices are full.
• Improved handling of multi-key repeating for USB keyboards.
• Expanded Family Settings to include support for blocking unrated DVDs and videos.
• Added ability to clear space from storage devices in download areas. (Maybe this is the Windows XP MCE functionality I mentioned above?)
• Added support for low-speed and full-speed USB keyboards.
• Improved CapsLock behavior for USB keyboards.
• Improved look and feel in Xbox Live Marketplace and Xbox Live Arcade areas. (Subtle, but good, solid stuff)
• Added redeem code option to Xbox Live signup. (Yay!)
• Removed system message at the start of new downloads. Messages will be displayed for completed items. (Freaking finally!)
• Added support for CCV credit card validation field in Xbox Live Marketplace purchase areas. (Credit card Operating Regulatons requirement; I know ;-)
• Updated “More Information” instructions in the Xbox Dashboard for connecting an Xbox 360 console to a Windows PC to stream digital media content.
• Added auto-scroll to long text descriptions in Xbox Dashboard UI.
• Improved support for DVD insertion while playing a video file.