Wow, this forum has really gone downhill, 6 Pages of people complaining about lack of AA and not a single person has stopped to explain how EDRAM works, and why AA is vistuall free, however only when the engine has been built with EDRAM in mind.
The EDRAM has 256GB/s of internal bandwidth, this means it has tons of bandwidth to apply effects like 4xAA, depth of field etc, there is no penalty here since 256GB/s is more than enough.
The penatly hit occurs because the EDRAM in Xenos is only 10MB, this mean that in order to fit a 720p frame into the 10MB EDRAM, and apply 4xAA, requires the frame be split into 4 tiles. 2xAA requires 2 tiles.
Now, in order for the game to support the EDRAM it has to incorporate somethign called 'predicated tiling.' When a game engine has implemnted predicated tiling from the ground up, which is fairly trivial, ATI suggests the performance using 4 tiles is only a 3-5% performance hit, and with 2xAA it is only a 1-3% performance hit.
So...what's the problem?
The problem is, until 4 months ago not a single developer had a GPU with EDRAM, they had no hardware to test their tiling with, and despite MS urging developers to incorporate predicated tiling into their engines, many developers haven't, and that's te reason, plain and simple, that 4xAA is not exactly free at this point. When tiling is built into an engine as an add-on, rather than from day 1, the performance hit can be more like 1-10% from 4xAA, definately far from free, but is still much less than the 10-30% hits that a typical GPU would take.
The important part, THIS IS NOT MSS FAULT. They have given developers a kick-ass GPU, with unified shaders(read: massive vertex shading power), EDRAM(free AA and other effects), built-in hardware tesselator (read: perfectly round wheels), MEMEXPORT (read: GPU based physics engine) and it is up to the developers to master this technology. The developers knew what had to be done to utilize the EDRAM, some did it and others did not, you can't blame MS for that.
MS is enforcing standards that no X360 game will exhibit noticeable jaggies, we'll see how closely they follow that.
The other important thing to remember, when implemented properly in the future, Xenos WILL HAVE VIRTUALLY FREE 4xAA. That's a fact, you can take that to the bank!
(By vurtually free I mean 3-5% performance hit as opposed to 10-30% the PS3 will suffer from)