Iron Brigade
One of my favourite 360 games of all time is Iron Brigade (formerly know as Trenched). It's like a tower defence/3rd person shooter with heaps of loot and awesome graphics, bosses, online co-op and good humour. Easily the best game on XBLA imo, cannot recommend this enough and i'm dying for a sequel.
Other recommendations:
Gatling Gears
Isometric shmup like assault heroes - Good diffculty, awesome graphics, explosions, co-op and quite a lengthy campaign.
Renegade Ops
- Same perks as Gatling Gears except co-op mode does a weird 1 screen to split screen type thing that works but can be a bit disorienting.
Others:
Scott Pilgrim Vs the World
Shadow Complex
I know the last two are a little over 2 years old but just thought i'd throw them out here.