Why there was no Spring Update

Rumours are currently coming out regarding an"avatar" system coming to Xbox Live.

Ever since it was announced that there would be no Spring Update this year there was speculation that Xbox Live would be getting a massive overhaul come Fall, and here it is.

Ever since the announcement of the Playstation Home it was always thought that Microsoft would respond with something similar, however as shown by the picture this more a response to the Wii's "Mii's", pair this with news of a "Newton" motion-sensitive controller and it seems that Microsoft wants a piece of Nintendo's casual cake.

Is this the right decision?

Although in terms of business it seems blindingly obvious, and it seems that both Microsoft and Sony are going after the casual market, yet I feel that with over 500,000 Wii's selling in May that it's too little too late. Of course from Microsoft's perspective it makes sense : go after a space you've been chasing after but have failed horribly at (see - "Scene It"), with what seems to be the new craze. The systems are already under the TV, why not let the whole finally get in on the Xbox action?

Details are scarce but it will be interesting to see what they say about it at E3, thus giving us a hint at who it will be marketed to.