Listening to the latest PAX Podcast by Major Nelson, it seems as though xbox are looking to find a way to release old gamertags on xbox live.
This should open up the door for some decent gamertags to arrive on the scene, rather than having add extra letter and numbers to get anything close to the name you actually want.
They didnt state when this would be available, but hopefully it will be sometime soon. The only down side to this as usual is the fact that it costs 800points to swap names, unless you signed up with one of the suggested names due to the one you wanting not being available.
Another point that came to light is that names can only be used once, regardless of spacing. For example, my xbox gamertag is ElBeerHunter, which means if someone want El Beer Hunter, it wouldnt be available. It think this is a cool feature, as it prevents people from impersonating other.
I will update as and when I get any further information.