The Head Honcho for XNA, Chris Satchell (not pictured above,) spoke with Eurogamer recently, noting that the touch-screen gaming is progressing nicely for the Zune. "Imagine bowling, where you swing across it, or anything that requires a physical dexterity gesture," Satchell said. Someone even ported a "Wolfenstein-style renderer" to their Zune, which ran it at 30 frames-per-second.
He went on to say he is "really looking forward to people using their networking ability to use peer-to-peer games," and that he's "sure we're going to see some peer-to-peer race games, kart-style games - those are going to be fun."
We likely won't see any of this until the next XNA development kit is released which might happen before the end of 2008. We also likely won't own a Zune by then either.
eurogamer.net: XNA Boss Talks Up Zune Concepts