* While using it as a media extender
There is always a catch right? Well if you are using your 360 with MCE, which totally rocks BTW, then surfing the web is actually pretty simple. All you need to do is install the free MCEBrowser on your MCE (or Vista) computer. Once installed, fire up your 360 and in the media center menu go to more programs. There you will find the browser.
MCEBrowser was written to allow MCE machines to surf the web using the remote. But the program also works with any media center extender - including the 360. You can use either a media center remote or a normal controller to navigate. The browser basically extends IE so anything your browser on your MCE box can support should work fine. Note that streaming video performance may not be the best however. The browser supports zoom if you need to make things easier to see. The major downsides are the lack of easy text input (if you don't have a USB keyboard plugged in), and the fact that without a mouse you have to 'tab' through all the links to find the one you want to open. The text input without a USB keyboard can be done with 3 tap on the remote, or the 360 on screen keyboard. Tabbing through links is probably something most smart phone users are used to anyway.
Here is a quick video of what it looks like. It was shot using my digicam instead of my camcorder, and was pointed at the projected image on my wall so the quality is not very good - but that will probably be masked by YouTube's low resolution feed anyhow.
Oh if you are a YouTube regular you might notice something 'wrong' with this video - it's called using a tripod. To get the effect you are used to, just move your head around randomly while you watch.