Here’s the latest action:

Joystiq reports rising Xbox 360 defects — Errors with the E74 code have been rising since the New Xbox Experience update on Xbox Live, according to a survey.

Windows Live Messenger adds chat to websites — In the words of TechCrunch’s Erick Schonfeld, “AIM, the ball is in your court.”

MySpace brings in Fotoflexer to allow photo customization — Up until this point, those features have only been available through third-party photo-editing tools.

Sohu files for an IPO
— The Chinese Internet company is hoping to raise up to $120 million on the Nasdaq Stock Market.

Citysearch launches new site — The new site tries to make the service more local and social with features like Facebook Connect. Citysearch started testing the redesign publicly in November.

New E3 show is 90 percent sold out — At least when it comes to the video game conference’s space for exhibitors.

Intellectual Ventures cuts licensing deal with Indian university — The move ties into the firm’s broader strategy to support innovation around the world, according to Xconomy.

Wesabe launches SpringBoard platform for banksThe platform takes Wesabe’s personal financial management tools and offers similar services to banks and credit unions.

VentureLoop adds job widgets — The widgets should make it easier for venture firms to advertise job openings at their portfolio companies.

Storage manufacturer LaCie acquires online storage provider Wuala — The terms of the deal were not disclosed .

Gamers buying prepaid currency cards for themselves, not their friends — Eighty percent Ultimate Game Card buyers purchase the cards to spend on virtual goods later, rather than as gifts for friends or family, according to a survey from PlaySpan, the makers of Ultimate Game Card.