The Xmega is a follow-on family to the AVR, with (essentially) more intelligence in the peripherals (and more peripherals to go with that intelligence.) So the 128A1 under discussion here has 128k flash, 8k ram, runs up to 32MHz (twice the speed of the mega currently in use), 8 timers, 8 UARTs, and an external memory interface (for 4-bit memory, apparently. Which is cool, but potentially slow)
It's not completely wonderful for a system like Arduino. All that fancy stuff doesn't really fit into the simplified programming model that Arduino present to its users. And it only runs at 3.6V, so there are some compatibility issues. OTOH, it's not that much more expensive either. If all it does is extend the Ardunio MEGA to something twice as fast, a port would still be useful...