Major Nelson just updated and offered a bit more detail about the upcoming Dashboard update for Xbox 360. Some of the cooler things:
Play from hard drive. You'll be able to copy game discs to your Xbox 360 hard drive. Installing the games will prevent wear 'n tear on the disc drive, and will shorten load times. You will still need the disc in the disc tray to prove you own the game. Hopefully, installing things on the Xbox 360 will come with sage advice, a la Metal Gear Solid 4.
Access Xbox LIVE Marketplace on the Web. If you're not near your Xbox 360, you can still use this "Internet" thing to browse and purchase things from the Marketplace. Once you purchase something from Xbox.com, it will download automatically to your console while you're away.
Xbox LIVE Primetime. This is a "whole new category of games" that not only supports Achievements and leaderboards, but will also offer real prizes. Games are played throughout the Xbox LIVE network and each game is "broadcast simultaneously" so that everyone is partaking in the same activity. These events can feature live hosts, "calling the shots as they happen."