Yeah basically you buy a $25 Xbox live "gift card" at a retail store, and add the unique card code to your profile.
Virtual currency systems tend to make lots of things complicated anyway. People trade points for accounts, points for live time, points for "powerleveling" and things like that. Not to mention possible scams.
This allows the possibility of more flexible pricing on items from now on as well. Not necessarily cheaper, but it allows the developing company to affix a realistic value on their content and the health of their business.