Most tech devices these days have upgradable firmware and usually this is a good thing. My cell phone, router, portable gaming unit, Rio Karma, empeg, XBox, and Vonage call box all are upgradable, but none of them are a general purpose PC. Instead of having to get a new portable console, I can online update mine to add in support for better movie codecs, or have a web browser added.

With my XBox 360, online updates mean more then just low level bug fixes or whatever. It also means I can go on and download a game demo before I go to the store. Or grab a classic game like Gauntlet or SmashTV. Even Nintendo is going this route with the Revolution, allowing online users to browse the entire catalogue and play a game. If I wanted to, I could play Zelda 1 - Twilight Princess on the Revolution. All because it is online and upgradable.

Most updates for the 360 will be backwards compatibility updates to allow more and more XBox 1 games to run on it.