Microsoft just dropped some details on the upcoming Xbox Live Dashboard update which begins rolling out later this summer – first, and perhaps most notably, we'll hit what won't be in this update: Facebook, Twitter, and Last.fm support, along with Zune video and 1080p Instant On video functionality. Those are coming in "future Xbox Live updates" Microsoft assures us. "Updates" plural, eh?
So, what is included? The Games on Demand feature will be available in August, giving you access to digital downloads of full retail games. Check out our video of the feature here. Netflix is being updated in a big way, bringing Movie Parties (kick back in a virtual theater – think "Party System" for your Netflix movies) and the ability to manage your Netflix queue right from the Xbox. They're also touting an "Enhanced Playback Experience" which we presume uses the latest Silverlight "Smooth Streaming" technology (see the demo here).
Also included: The Avatar Marketplace, so you can buy virtual crap for your Avatar; User ratings, so you can attach a star rating to "every game on the Xbox LIVE Games Marketplace" (this thankfully includes Community ... err, Indie Games which have been sorely in need of community moderation!); and more. You can check out the full list after the break, or peruse the gallery of screens Microsoft just dropped on us.