1. Game Studio Express looks very interesting. Not ready for prime time, but something I'm going to check out for sure.
2. RoboBlitz is outstanding. I'm definitely sold on the game. I'll be buying it myself and recommending it to anyone I know looking for a great 3rd-person 3D action adventure game on the 360.
3. ProFX2 (the procedural texture system) is also a lot more convincing than I thought. I'm still not sold on the price, but I think most or all of my concerns about how useable it is are resolved.
4. Live Arcade is crazy-hot. Every time I saw Ross Erickson, he was being hit up by another developer with Live Arcade plans.
5. Here's something awesome about the Xbox 360 team: Nobody is sitting back and watching things go by. Every subgroup working on some aspect of the 360 (Dashboard, Live Vision Camera, Live Arcade, Dev Support, Marketing, QA, etc.) is pushing forward very heavily with new support, feature updates, future plans... The system is just getting better and better, and I was already pretty happy with it a long time ago. :)