Microsoft is charging developers $100 a year to sell the games they create. Before they can be sold though, the games will go through a review to make sure they are in acceptable guidelines.
Users will be able to set the price of their games, while Microsoft will get %30 of the profit. If you developed a game and sold it for $1.75 and it was downloaded 500,000 times, you would make $875,000.
Xbox Live Community Games will go live for users sometime this fall, although Microsoft has not yet announced a specific launch date.