A big source of motivation for the update comes from the launch of Kinect. Along with wanting to refresh the look, the layout has been cleaned up, seemingly to make it more gesture friendly. Though I do not have a Kinect at home, having used it several times at press events I recognize the need for changes like flattening out all the menu panels. Each selectable frame now lays flat, with no overlap. The currently selection then pops forward, making it easy to grab in virtual space with your hand.
A general design aesthetic aimed to lighten things up compliments the less flashy look. Menu panels now sport a white background with the new signature green swoosh. Likewise, the Xbox Guide menu that comes up from pressing the Xbox jewel on the controller now also is on a white back ground. And all around, from these menus to my gamertag in the top right corner, the font has been set to a nice, modern look that's very legible.
The update also brings ESPN and Zune music services into the system, but each comes with limitations. Everyone will be able to watch video clips of ESPN in a virtual auditorium filled with avatars. Video screens hang on the walls displaying the clips and can go full screen. Quality varied but many of the Sportscenter clips were sharper than standard definition television. The much hyped inclusion of ESPN3, though, comes with the same limited availability as ESPN3.com, which is based on your ISP. Check ESPN's official list of supported ISPs.
Zune's music service also joins Xbox Live to go alongside the video service already in place. For Zune users, this adds a convenient new way to take advantage of the unlimited streaming that comes with a monthly Zune pass. I tried it out and the sound quality is definitely solid and the ability to select any song I want to play and build my own queue gives it two advantages over Last.fm. Whether that's enough of a difference to inspire you to buy a $14.99 per month Zune pass, which is required to use the service, depends on how much you'd listen to it and what sort of sound system you plan to pump it through.
The Zune interface does include a nice search function that updates as letters are selected. So, for instance, to find Samantha James I selected S-a-m-a-n and by about that point I saw her name in the artists list. This same search mechanism has also been added to Netflix for finding films available via their streaming service. In both cases results updated quickly, keeping up with me as I entered the next letter to refine my search.
Though the exact timing of the update remains unannounced, it has to come out in advance of the Kinect's launch in November to support the new device. But if you can't wait, it's a safe bet Microsoft will offer a few more chances to get it ahead of time in the next few weeks.