The update might not have reached you yet, so don't panic if you aren't getting the prompt to accept this update. Try again in a few hours.
Here's a couple of points from Nelson:
* While you can browse and purchase Avatar items and full Xbox 360 games in the console with this update, the ability to add these items your Xbox 360 download queue from Xbox.com will be available this Thursday.
* Xbox LIVE integration with Twitter, Facebook and Last.FM will be available later this year.
* Zune Video Marketplace will also ship later this fall when it will replace the current Video Marketplace.
Head here for a full list of changes.