A question for those connected with VGA connection. Play a DVD on your 360. Does the 360 now upconverts it to resolution other than its 480p?
There are reports that with the new update, the 360 now works basically like those expensive DVD player that have the upconverting capabilities. Native DVD resolution is 480p, but there are commercially available DVD players that can upconverts the video feed to 720p and 1080i.

Congratulations! Your Xbox 360 now is an upscaling DVd player!

All the more reason for those who hadnt experienced image upscaling on DVDs before to try out the VGA connection.

I had upscaling through component using my HD-850 Samsung DVD player, 720p and 1080i, but looks like the 360 is now a two-in-one, the ultimate console + upscaling DVD player! Hooray!

Only via VGA. Microsoft is bound to face MPAA's wrath if they do that via component connection. Funny thing is, VGA and component are both analog and unsecured, so why only VGA?

Pirated DVD only? If you can be sure that your pirated DVDs are copoed exactly from its source and a one-to-one copy without downscaling or is original source touched, then it should be good i think.

Holy Shit Holy Shit Holy Shit Holy Shit!

Those with MCE paired with your 360 will FLIP!!!!!

I SALUTE you Microsoft!

Remember the VGA only upscaling for your DVDs? NOT ANYMORE!

Those with movies inside your MCE PCs will have ALL your movies UPSCALED TO the resolution you set on 360! That means, ALL my movies , stored in the MCE , ripped at 480p, now shows up at 1080i/720p! Pure EYE CANDY! 

Thank you SO MUCH MS! I <3 U!!!!!!!   

My Matrix movies in 720p/1080i! All Pixar movie awesomeness in 720p/1080i! Bloody Star Wars Episode I till VI, in 720p/1080i!! I died and gone to HEAVEN!

The next step here is to find higher quality video sources (such as from HD-DVDs and Blueray discs, or WMVHD movies) at 720p and higher quality, and rip them one-to-one at original resolution.

This may be Microsoft's preparation for the upcoming HD-DVD addon not to far in the future.

I got to get my update later. By the way, stringfellow, if the upscale is just available on VGA, that's mean I can only view it in my monitor but not TV? Or only the HDTV has VGA port?