Not a big surprise I guess given the popularity of social networks but great to see this being added to XBOX Live. There has been a lot of chat lately about where Facebook in particular will be in a years time as for many people I have spoken to, the novelty of searching each others friends lists has kind of worn off. This added to the incessant Facebook spam means I probably check the site one or twice a day rather than once or twice an hour as I may have in the past.
Facebook will still be around - that's undoubted but will people start to split off in to their own social network enclaves on Ning, Community Builder, or XBOX for that matter? Personally, I think they will unless there is some "big new thing" that keeps us coming back to FB. Right now, there is more pushing me away than pulling me in.