First off, you'll probably immediately notice the new user-interface. The reorganization of the the blades, along with the addition of the Zune-ish "Twist" interface. I played around with it last night after the update, and I really like it. I'm glad to finally see some much-needed organization going on in the Marketplace blade.
Also, the addition of Inside Xbox was a really nice feature. Combining the friends and messages to one button (which makes sense because before either button would bring you to the same guide), made room for the Inside Xbox feature. Included right now is a video from MajorNelson detailing some of the new features of the update, along with some Xbox news. I really like this feature and is also a nice addition. Call me easily amused, but I think it will be quite useful.
Of course, there is the Microsoft-touted parental timer, which is completely useless to me. I don't have kids (if I did they sure as hell wouldn't play on my 360. Not that I'm a proponent against videogame-violence, but...well, it's MINE!), and I have no need to limit the amount of time I play on the 360 myself (unless I'm trying to shake a really bad Halo addiction). Needless to say, I haven't played with this feature, and never will, but it's nice if parents take the time to figure out how to use it (V-chip anyone?) and actually do use it. It'll be nice not to hear as many little kids online at 4A.M. "What's that Johnny, I took your Xbox power cord and you borrowed one from your friend? Well, you can have your's back, because now your xbox won't even let you play!!"
Another much-touted Microsoft feature, that of the Xbox Originals, was also something that I don't have much use for. I own any of the decent games available for it right now, so I have no need to buy them over again just to have the same goofy emulation problems, no achievements and no online play. This feature could have been awesome, and still has some potential to be, but it certainly needs a lot of work. What would've been nice is if you had the disc for the game then you could download it from Xbox Originals for free, but I guess Microsoft could fear fraud from someone renting the games just to get them. Then again, most of these games are cheaper to buy used than to even rent, so what's the big idea overcharging us for last gen games Microsoft?
Yet another highly advertised and seemingly useless feature is that of the friends-of-friends feature, allowing you to see your friend's friends on XBox Live. I don't need this feature; I actually blocked mine before the update was even released. I don't need other people snooping around my friend's list being like "Oh, you're friends with that kid?" What is kind of nice is, along with this feature, was the inclusion of being able to add your location, real name, and a little bio about yourself. If nothing else, it gives you something to read during Forza 2 endurance races. Do I see a Dateline: Xbox in the future?
Alright, now that I've gotten the three most-advertised and mose-useless features out of the way, onto the good stuff: The stuff they didn't tell you about. First up, XBLA Greatest Hits. I love saving money, I love getting (or think I'm getting) a deal, so XBLA Greatest Hits is for me. This is sort of like the Platinum games in retail: they're best-selling Xbox Live Arcade games that will be singled out for permanent discount. The list starts off with Bankshot Billiards and Lumines Live (800 points), as well as Marble Blast Ultra, Small Arms, and Zuma Deluxe (400 points). I'll definitely be picking up some more XBLA games now.
Another huge feature that is really nice to have is that of AVI and DivX/XviD support. This is a huge feature that has been asked for since the beginning, and Microsoft has finally delivered, but not without hamming it up at least a little. Let's take a look:
First off, you can play files off of a CD/DVD. This feature wasn't listed on the Xbox Team's website as one of the supported locations for playing back content, but this is fantastic for those of you who have your Xbox connected via wireless. Reading off a disc is probably the best way to ensure your movie won't cut out in the middle due to network congestion or your computer screwing up.
It supports almost all files. I tried mostly TV shows, which are encoded in XviD format. As for DivX, that's supported back to version 5.0, but it's unlikely that you're going to find any DivX 3 or DivX 4 online, unless you're talking about old files you've saved for a couple years (Come on, I know you've got some old DivX 4 clips of that hot chick taking her top off)
AC3 Audio 5.1 is supported. AC3 support was added in the Spring Update, but it's nice to see it working with DivX/XviD. It supports Windows Home Server as well. Along with USB drives and WMP11 streaming, you can also stream DivX/XviD from Windows Home Server too.
Video Stretching is kind of weird. The Xbox will try and auto-fit your video to the screen when it starts playing, but it gets confused easily with different video dimensions. You'll want to manually change the playback mode to either letterbox or stretched, depending on what kind of content (widescreen, fullscreen, PAL) you're playing back.
You can skip through a video with the bumpers. RB and LB let you skip forward and back through the movie, but might not be granular enough to get to the place you want to be. You'll have to use the trigger buttons to FF or RW.
It's fast. If your network connection is fast enough (my network is Gigabit Ethernet enabled, which isn't a huge deal since the 360 is only 10/100), the video should play back without a hitch. It's quite nice to be able to play back stuff on your 360, in HD, without having to transcode it into WMV first.
It doesn't work in Windows Media Center Extender. You're going to have to exit out of WMC and back to the dashboard in order to play your videos, which can be annoying for people who like to switch between live TV and downloaded content.
It's not entirely perfect, but it's 90% of the way there. With improved handling of different video dimensions, better playback controls and Windows Media Center Extender support the Xbox will be perfect for DivX/XviD.
Well, there is most of the Dash update in a nutshell. There are some other minor under the hood tweaks, but these are the things that you'll notice or care about. Yes, well not quite as plentiful as past updates, there is a lot more going on here than we realize. In Microsoft's defense, something as simple as the rearrangement of blades and implementation of the "Twist" interface calls for tons of code to be written and rigorous testing to ensure stability, so that along with all of the other features should tide us over to the Spring update.