The next Xbox 360 update will finally officially kill Microsoft Points dead. All your points will be converted over to an amount of currency equal to or greater than your points. Any Microsoft Points Cards will still be valid too (and transferred to real dollars). [Microsoft]
According to The Verge, Xbox Points are finally going to die. Rumor is that Microsoft will move to a gift card system not unlike iTunes. The system's said to work across Windows Store, Windows Phone Store, and Xbox, with a launch as soon as E3. We'll see.