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Major Nelson has all of in info on the upcoming Xbox 360 dashboard update. One of the most talked about update is the integration of Windows Live Messenger. This will allow you to chat with friends on who are on Xbox live, or windows live messenger. Here is the full features list.

The redesigned Achievement notification pop-up (toast) will show the name of the unlocked Achievement and the gamerscore value. You’ll see this information the moment you earn an achievement. No more popping open the guide and interrupting your gameplay.

Enhanced family settings features for Xbox LIVE communications enable different defaults for video chat and voice chat.

A new Xbox LIVE Marketplace blade lets Xbox LIVE members access the content they seek - whether it is game content or TV shows and movies (available in the United States) - from one place.

Updates to Xbox LIVE Arcade allow owners to see which Xbox LIVE Arcade games their friends are playing and join in the fun. Xbox LIVE members can also compare progress of leaderboard scores and Achievements directly with all friends on their friends list. The Tell a Friend capabilities have been expanded as well.

A new option in Auto Downloads provides faster access to the entire collection of free, trial-version Xbox LIVE Arcade games.

New progressive download controls provide easy access to optimal viewing options by letting people fast-forward, rewind, pause and resume as their video is downloaded from Xbox LIVE Marketplace.

Extension of the background download functionality will allow owners to set their Xbox 360 console to turn off automatically after downloads are complete.

Also Microsoft will be releasing a keyboard accessory for controllers that is an addon, not a separate controller that is a full QUERTY keyboard. Not a lot is known about this device, there is no release date, no price, not even a name! It is said to be released sometime in the summer. Until they there will be a popup on-screen keyboard. You can always use a USB keyboard though.

[Via Major Nelson]