I know for a fact I saw a picture with them using MS as well, and I read about it in some other articles.. It lags for me a lot of the times.. sometimes it'll take 30 seconds for the xbox guide button to load up.
The ones for MSPs are for original Xbox games. Not 360 games. Luckily, I got into the preview program. =] woot woot
Basically, there are three payments for Games on Demand - MSP, Credit Card and Debit. That's for certain since Major Nelson himself said it. I got that last update for people in the Preview program in the middle of a 7 on the 7th game, I thought my internet just suddenly went! All it seems to have added is a new 'thank you for participating' message, and the GoD Marketplace.
The update is now out to the public. None of the GoD's really interest me, and a lot of the stuff on the avatar market place looks really retarded. Still, we'll see how this turns out.