I'm not surprised at all. Microsoft already has Ultimate TV, which hasn't done all that well on its own. It also bought WebTV a few years ago, and pretty much let it die out (although some still use it). It doesn't take a rocket scientist to see that both of these products could easily take adavantage of the X-Box's broadband and hard drive features. MSFT reusing technology. Good for them.
It would be great to have a PVR built in to the Xbox...but I know it would have put the cost a lot higher. I look forward to any future plans that MS may have as long as it doesn't require the purchase of multiple add on items. I think the Xbox has a lot of potential. Shoot, I got a kick out of trying out the online play tonight. I had to get that in before I was thrust into dial up torture...until my DSL is installed to replace Cox@home.
I think this point had really influenced my decision to get an Xbox. Its hardware has so much potential to do many things that we just haven't thought would be cool for games yet. The online app is a great example of what can happen when people have tools to be creative with and not have hardware limitations getting in the way.