There is a huge amount of updates in Novembers Xbox live update. The most notable of the changes are HD 1080p video mode over VGA and component cables, support for the Xbox 360 HD DVD player and playing video from CD or DVD disks.
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Another cool addition is the ability to set up automatic download of newly released Xbox Live Arcade trial games. If you are an Xbox fan it seems this new update is chocked full of new things to improve your system. A full list of the changes can be found at the Xbox website.