Because there's already a universe of content for it! eg. If you go custom, you'd then need to create your own custom dictionary rather than look up Dictionary.com. You'll need your own Wikipedia. You'll need your own forums and content sharing sites, which then lock you out of other people's experiences. That is, someone sharing photos of their holiday to PC owning friends (and indeed traditional browser friends) would need to go through separate steps to share with XB360 owners iof they have a custom internet system. You've got a funny movie of your cat doing something silly? Share it on YouTube...and have those without a browser missing it.And if you're doing some custom stuff, why should you do a web application in the first place?
It shouldn't be too difficult with the keyboard add-on for the 360 controller. They could just as easily have a cursor and scrolling controlled by the analog sticks, and have the navigation functions mapped to the other buttons. Bumpers for back and forward, triggers for zooming in and out. A = Enter/click, B = Stop.
And if you want to get fancy, have the analog stick buttons open new tabs or close the current tab, and switch between tabs using X or Y.
I do like the idea of easy access to select web services though. They could have a page for that, and you choose from a number of them to add as quick links. I'm imagining something more in-line with how you can choose the search engine in IE7 where they just have a list of popular engines and you pick the default or the ones you want for quicker access. So the page with all the quick links ends up just being an organized list between Video sites, Picture/Album sites, e-mail sites, forums, RSS...
@AzBat: that's exactly why developing page for Media Center is so different from developing one for regular web consumption. I did both in my previous job and if there's something I've learned from that experience is that browsing web from the couch is not fun. Custom UI is a must for TV even if you have HD capable display. And if you're doing some custom stuff, why should you do a web application in the first place? Good toolkit for stand-alone Xbox 360 applications consuming data over HTTP would be better than regular web browser. Less flexible, yes, but at the same time less frustrating.
Choice is in most cases good only for "advanced" users.