The integration between online and the xbox interface is more tight, it’s much more usable, there’s more information before you buy a specific item on the marketplace and a bunch of new features making the experience very worthwhile.

You can now install games on the hard-drive, thus cutting down on loading times and making the Xbox run quieter.

The new avatars look cute but they don’t add much value yet, I guess it’s the natural response to PS3′s Home and the Wii’s interface with the Mii’s. So far there’s only two games that take advantage of the new avatars but I guess more will come in the future.

There’s also new “premium” themes which look impressive but cost more. I don’t understand why there isn’t an option to preview a theme yet but some nice folks have been taking photos and screenshots so you know what you’re buying beforehand.

G4TV also posted a nice preview video but if you have a Xbox 360 the best thing to do is just connect it to the web and update.

Gizmodo also has a great article: 10 things you should know about the new Xbox Live Experience.