Dashboard updates, game updates, game demos/trailers, last.fm, facebook, twitter, netflix, cross game chat (something the PS3 STILL lacks), cross game parties and many other features that they HAVE to make money on somehow.
I'd also like to point out that the PS3 and the Wii don't have these features, so if you're looking for a social gaming experience the 360 is STILL the best option. Never mind the fact that the PS3 has free online.
Also, the cost of everything has been going up lately. This should be no surprise.
dashboard updates are on silver, game updates are on silver and are made by the game developer not microsoft, demos and trailers are free to download on silver IIRC, last.fm is a free service provided by someone else, facebook is someone else and i wouldn't want to use facebook on the xbox myself, netflix might be right but that service is from someone else mostly, cross game chat is pretty much nothing there are a lot of free instant messaging programs, and what exactly is the point of cross game parties?
and all of that goes through your internet service provider, and maybe a little bit of it does something on microsoft's servers