Microsoft makes game development easier for all levels of Xbox 360 developers, with new development kits for professionals and updated XNA Game Studio software that adds avatar and Live Party support.
Both XNA community game creators and Xbox Live Arcade developers who utilize the XNA Games Studio will be able to add Xbox Live avatars into their games once the 3.1 version of the software is introduced, perhaps delivering the first interesting thing to do with the generic little buggers since they launched last year. The XNA update also includes support for the Xbox Live Party system, along with video playback and new audio APIs.
For the professional developer, Microsoft is showing off new Xbox 360 Development and Test Kit hardware, featuring more debugging memory, which lets developers develop more efficiently.
Perhaps not the most exciting news from a consumer standpoint, but just you wait until the twisted XNA creator community gets a hold of those poor, poor avatars. The carnage shall be epic.