The Spring Xbox 360 Dashboard update is inching closer to release. Today we have learned from our sources that the update will be deployed in six waves, starting on May 19th to May 30th. The reason for the six waves of deployment is said to ensure a high quality update experience for all customers.

While it was thought that Hulu Plus would be part of the Spring Update, instead Microsoft dropped that head of the update. The two big things in this deployment are the ability to use PayPal for payment and deployment of the XGD3 disc format support.

The XGD3 disc format support allows the use of a different disc structure, which increases the available storage on the disc. With games getting bigger, this improvement will help developers by providing more storage space per disc. Sources tell us that game titles coming later in 2011 will use this format. Also, the new format adds some additional layers of copy protection to combat piracy.

The other enhancement that was expected with the Spring Update is Avatar Kinect, but sources tell us now that Microsoft has elected to offer this as a separate download starting on May 27th, rather than bundling it with the Spring Update. This is really a good decision, because those that don’t have Kinect don’t need to waste time downloading and installing it.

Beyond these improvements, there are said to be a number of things that are part of the update but under the hood and will not be visible to users. We are now hearing that Microsoft has some more robust plans for the fall update, but as of yet we can’t find out what Microsoft could have in store this fall.