Well, finally got it installed on Friday...
My initial reaction was this:
"Microsoft must have been really afraid of Nintendo when they redesigned the dashboard"
Seriously the look and feel, the cutesy music and imagery to the avatar creation they took a lot from Nintendo's playbook. Is this good or bad? For me I see it as against the grain a bit, like putting a "Hello Kitty" sticker on an AK-47. XBox is supposed to be this "rad" experience for people who will spend $4K on a new HD tv/reciever, not a warm fuzzy cuddly gaming machine like Wii.
The menus are great, immediately usable and easy to find stuff on the surface.
The avatar creation system is really bad, not due to lack of options or anything like that but, the fact that you must create an avatar after logging in for the first time is a bit of a pain in the ass. Being forced to pick an avatar from which to start from is also a pain in the ass and completely unnecessary.
I don't see how the avatars will fit into the kinds of games I'm playing on the XBox. It's not like Wii games which use the avatars.
The upgrade was a mixed bag for me, on one hand it cleaned up the menus, but on the other it added a bunch of useless fluff that I couldn't care less about.