Here's a few of my favorite XBLA games. I've excluded any games that have been removed from the marketplace.

Dungeon Defenders
Nexuiz
Super Meat Boy
N+
Trials HD
Splosion Man
Ms. Splosion Man
Mercury HG
Bomberman LIVE
Full House Poker
Bejeweled Blitz LIVE
Raskulls
Peggle
PACMAN CE: DX
Zeit
Castle Crashers
Rock of Ages
Hydro Thunder
Outrun Online Arcade
Geometry Wars
Geometry Wars 2
The Dishwasher
The Dishwasher: VS
LIMBO