1. Microsoft want this process to be used for bug fixes only - see http://forums.xna.com/forums/p/19716/102917.aspx#102917 - its not intended to be used for adding game features, downloadable or episodic content. At GameFest 2008 it was stated that at Approval your game should be "complete" and that if you have a new version you should release it as a new game e.g. Halo and Halo 2
2. Only new downloads will get the update: *** Game Studio 3.1 - date unannounced -  will have update notification included ****
   1. There is no auto update implemented with XNA games
   2. There is no way for you to contact the users who have purchased your game to tell them to download it*
3. Your update will take at least 9 days to hit the service. There is a 7 day limit on resubmissions and a 48 hour minimum review time. So this is not a good way to fix zero day type bugs. If someone finds a crash in your game its probably better to pull the game and fix it.
4. Updates often take longer to pass because reviewers are bored of seeing them. Unless you have a good following, or your game is great fun you might take a long longer than 9 days.
5. Your game will no longer jump to the top of new releases with an update. You get one shot at that list when the game is originally released.

Right now though there is no defined consequence for ignoring the Microsoft request and its not beign enforced. Several games have added features either with or without bug fixes.

* Its been speculated that games which use networking could communicate their version with each other and that older versions of the game could, if written correctly, notify the user that a new version is available. This is all code for you to write and test though.