To this day Im still wondering what was the idea behind Xbox avatars other than being a pretty icon to stare at and waste money on.
Its been suggested several times that the avatars could be put to some good use in a virtual space where they could walk, chat and perform other actions.
Lets see how this could work...
You start off by having a personal planet which acts as your "server" it will change seasons and day/night cycles depending on the time and month. Your current friends on your list will populate your game world and wander around, when your friends join up they will take control of their avatars.
Each of your friends will have their own house which they can customize with different styles, furniture and colors the houses are small but big enough to fit several people and the things inside.
There is no ultimate goal to the game, consider it a prettier and more interactive way of chatting and hanging out with friends on the system. You could even create and customize your own clothes based on basic models already in the marketplace like hats, tshirts, hoodies and pants, but these would only be usable inside the game world if you choose to use them instead of your already owned avatar gear.
There would be events you and your friends could take part of like season hunts, or costume contests for halloween as well as gift giving at the end of the year.
I know a lot of people oppose this and think its a trivial idea, but hey, at least its something better than having your avatar sit like a fool on the dashboard.