A lot of people seem to want it so it looks like a big step forward but I just don't think the people that are so excited about this understand the storage space requirements for a full space DVD library. You are going to fill a 120gig drive in about 15 films leaving no space for applications or games. If you have a favorite film or two I can understand it since it becomes portable and easy to call up but the xbox is limited in HDD size and I don't know that streaming is supported (in which case I don't know too many people with 500-800gigs for a movie collection on a server).
I have about 60 divx films on my 120gig right now plus 7 xbox games, 10 emulators, and thousands of roms. I have about 50 gigs free. Right now I'm in the process of encoding my DVD collection to divx - I stream most of them from my server upstairs. Most divx rips are short of excellent quality because people are trying to get them to fit on a CD. To get them down to 700MB (kazaa's favored size) they use reencoded audio and low bitrates which result in the quality loss. You can specify your own quality through resolution and files size allowances. I generally keep almost full resolution and original dolby digitall 5.1 sound. So my rips are 1.1 gig for the equivalent 700MB rip. I have plenty of storage on my server and xbox for that but I definitely don't have enough for 7 gig files and I don't know many people who do. Tell me you guys are all going to take your games off the harddrive to make room for your movies?