An update to the Xbox Live Extras app (v.1.6) was released yesterday, that gives users access to more content, accessories, and clothing for their Xbox Live avatars through the new Avatar Marketplace. This is actually very significant because these new items are purchased with Microsoft Points directly in the app, and users can buy MS Points through their phone.
The introduction of MS Points as in-app purchasing currency on Windows Phone means users may be able to eventually use those credits toward buying apps as well, a feature that has frustrated quite a few potential WP gamers.
With the massive "Mango" platform update later this year, native support for Xbox Live in Windows Phone's Games Hub will be greatly improved. It’ll add the ability to view played games and achievement lists, as well as compare those achievements with other Xbox Live members.
Users will be able to track their friends' activity live from their phone, with the ability to search statuses and see what services they're using. Xbox Live messages will be available through the phone, as well as the ability to send/accept/reject friend requests.