From eurogamer.net:

A highly placed development source has confirmed to Digital Foundry that the new disc format being beta tested in a new dashboard upgrade adds 1GB to the storage of Xbox 360 game discs.

The maximum space allocated to game data on the current disc format is just 6.8GB out of a maximum of 7.95GB on a standard dual layer DVD, with over 1GB dedicated to a DVD-Video partition that also contained anti-piracy security sectors. It seems that this video partition has either been drastically reduced or omitted completely in the new format Microsoft is looking to roll-out.

Beta testers of the new dashboard get a free copy of Halo: Reach once they are accepted into the new preview programme. We can assume that this isn't just a generous gift on Microsoft's part - more likely it is a disc pressed using the new format, and Microsoft is looking for data on performance on as many different systems as it can.
From C4Eva on EFnet via c4evaspeaks.com:

[Z****] so what do u think about new disc format [http://c4evaspeaks.com/new-xgd3-disc...dash-preview]?
[c4eva-] MS will introduce xgd3 – this will add more ap checks, cvi (content integerity) checks, increase the disc size and adds a new layer for protection issues – all in the 20500 sdk! bring it on!
[J*****] C4 will this effect the launch of Slim lt? will it be delayed for some reason?
[c4eva-] j*****:No
[c4eva-] will know more once we get one of these new discs!