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There's really only one Ad for every other section (games, music.video, etc). NONE of the ads play during a game. Not even demos, unlike on PC, phones, etc.
Many of the Ads provide content like themes and avatar items. Granted they tend to be plastered with their logo/name but some of the items you don't get elsewhere. Like Verizon's surf board or the phone prop. I missed out on the free Wolverine claws from a Ad because I was at a friend's house when it was available. :(
The other "Ads" ore there simply to inform us of whats available in that section. I would have missed out on the free games and movie rentals if not for those "Ads".
As for the interface, I like it. It took a few days to relearn where everything was, but after that I had no issues with it. It's better then the Blades and NXE in my view. Tough I do miss the Themes that seem pointless now.
As for the updates being required to play games....DUH It's a software update. It's updating more then just the UI. Otherwise it wouldn't be required.