An Xbox 360 firmware update is coming between May 19th - 30th according to a leaked Microsoft memo on Joystiq.

The stand out feature is the introduction of PayPal to international markets.  Users will be able to use the system to buy points, content, and pay for Xbox Live subscriptions.  Another stand-out feature is the introduction to the new Xbox 360 disc format that Microsoft beta tested back in March.  According to the memo it allows for “additional storage space on a game disc, and provides additional layers of copy protection.” Games will begin shipping on the new disc format later this year.

Another memo claims the Avatar Kinect video chat application is also to be released later this month, on May 27.

Source: Joystiq