This updates adds dedicated "blade" for XBOX's very own "Live Marketplace". It will have cross-platform integration with Windows Live Messenger, improved VGS performance, and support for H.264 & MPEG-4 codecs.
You would need to have your XBOX connected to the internet to download the update. Microsoft has evidentially put alot of thought in this as while downloading the update, the XBOX will put itself in a "hibernate" mode to conserve power consumption and will even turn itself off when done.
Edit: Our
Xbox 360 H.264 conversion guide has just been released. The guide shows you how to convert your DVD/AVI/DivX/XviD/MOV files to a Xbox 360 compatible H.264 (MP4) file, and then stream it to your Xbox 360 using the Zune software. As usual, all the tools required are free.
-jmet
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