The XBox 360 System update is now being rolled out gradually to all XBox Live users. The update will happen in the next couple of weeks according to Major Nelson.

There a three new features in the update:
1. New file format on the game discs that will allow for more data to be stored and probably faster read speeds.
2. Integration with PayPal (not in all regions)
3. Auto standby that will put the xbox into standby mode after one hour to save power. This feature will be enabled by default after the update.

See all the details here: http://majornelson.com/2011/05/19/new-xbox-360-system-update-brings-expanded-paypal-functionality/