Looks like Microsoft's going to be updating
the codec for voice communication on Xbox Live here soon. They haven't changed the low bit-rate codec since the initial launch of the service on the original Xbox but with Kinect
coming out, they're going to up the quality a bit.
Back when they first launched, the broadband speed was pretty low compared to today so they have some extra room to play with now. It's good to see they're improving on the communications portion of the infrastructure as many of their demonstration videos has users of Kinect
conversing with friends online. If you want a good quality experience, you're going to have to make the voices sound better and they're going to do that in the next update.