I still have my launch 360 with no problems im pretty proud to say this from what i hear this is pretty rare....... I have had some hiccups while playing rainbow six online mainly because of my weak wireless b adapter.
I bought my 360 on launch day and thought I had a good one. It broke down just 2 weeks ago with the 3 red lights. I have the Circuit City extended warranty but who knows how much good it will prove tp be. It has been there for 2 weeks...I can see them sending it back, telling me I broke it myself or something like that.
My 360 has given me no problems at all, although i just got it in april.
Something weird i have noticed is that it the fans have actually gotten quieter with time.