My trusty (lucky for me at least), old Xbox 360 appears to be getting some serious enhancements at both at the hardware and software level. It’s pretty exciting news on two fronts. First, it means that the Xbox 360 is likely going to be sticking around for another 3 or 4 years. Secondly, and most importantly (I’m pretty sure I screwed the order up there because the most important news item should be first if it is indeed the most important point), there’s some really innovative social software enhancements around the corner. And, looming in the not too distant horizon, total video game immersion via Project Natal.

On the software tip, it looks like there’ll be some big upgrades to the Netflix service by allowing the queuing of content straight from your Xbox. And apparently there will be a service to stream 1080p movies instantly through Zune Marketplace. Too bad I live in Canada because the Netflix additions sound like all my convergence dreams come true. I wonder how close Microsoft is to working out a deal with Hulu?

This fall will bring Twitter, Last FM and Facebook apps to the Xbox OS. Now, if Microsoft will only open the Xbox Operating System with an SDK for every day developers to build apps and additional features. Then, my friends, we’ll really see some movement on the software front.

But, the most exciting announcement is, of course, is Project Natal. What does it mean? Not sure. But super nerd Johnny Chung Lee is involved so this thing is gonna be bomb. And it’s not just him, it’s a big team of genius nerds working together to beat the Wii at what it does best. The only problem? Probably the fact we’ll be waiting a year or longer to see this thing on store shelves. But that’s the good news. I can’t see Microsoft abandoning the 360 until at least 2012 or 2013. Imagine the heartbreak of buying Natal and then seeing a new Xbox generation released. It appears we’ve barely scratched the surface with the current generation of consoles and the next wave of innovations are going to take place with software.

Check out Natal in action:

Even better, check out this review Gizmodo just did.