It has a totally new layout with quite a lot of options added . The best thing about this update is that it let's you install games to your hard drive which reduces the load times considerably.
However you still need the disk to be inserted in order to play the game but the good thing is that it doesn't keep spinning all the time which reduces the load on the ROM, meaning that it won't heat up the 360 and it'll last much longer.
Another great addition are the fun looking avatars which you can customize to your liking with a number of different clothes, accessories and other stuff. Here are the screens:
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