There's a Zune event going on up at the Microsoft event today and the Zune team showed off a few demos of games. Two cool aspects are that Zune XNA games supports 8-player ad-hoc wireless game play, and while there is no 3D hardware acceleration, it can use software rendering for 3D. The demo for the first-person shooter, Potato Chase, put these features on display.
Potato Chase controls pretty smoothly with the Zune Pad. You push slightly on any edge and it moves you forward, backward, left or right. Click the middle, or any of the edges, and it fires a bomb toward your adversary. You can host a game, or join a game wirelessly with up to eight other players. While it is a primative demo, there was a minimal amount of slowdown while playing with two other people. There's also an API feature that uses album art to build the walls of the battle arena, however it wasn't functional on the demo units. Pretty cool stuff from the XNA team.