Judging from the picture below, avatar customisation will be far more in depth then it is on Wii, with users being able to choose from a wide range of colourful costumes and looks.
The Mii-style avatars are rumoured to fit in with a new social gaming channel, which will allow users to quickly jump into party games, such as 'Who Wants To Be A Millionaire', as well as sports and puzzle based games.

Sounds good right? Well, don't get too excited as there may well be a sting in the tail.
Whereas Mii avatars are available on Wii totally free of charge, we'd be silly to believe that Xbox 360 avatars won't cost us. Almost nothing is free on the Xbox live marketplace right? There's also the suggestion that licensed costumes will be available to dress our avatars, such as Mr Incredible's super-hero outfit? How much is that going to knock us?
The opportunity for Microsoft to make some serious wedge from this idea is huge. Licensed football club kits. Movie hero costumes, Nike trainers; the potential for coining in the MS points is massive.
Possible price list?
Social Gaming Channel :: 1000 points download
Man Utd Top :: 800 points
Adidas shorts, 200 points
Nike Trainers, 100 points
Owning a Wii, priceless
Microsoft has not confirmed that the project even exists, but with E3 approaching, it looks like Intelliponse may have ruined one of the company's' big announcements.
Of course, we've got our fingers crossed that the new avatars will be free, but we certainly wouldn't bet on it.
Source :: Xbox 360 fanboy