Just seen this on Xbox Forums. Thought it might interest you:
"The Xbox Live team has noticed and received reports from the Xbox Live community about users connecting to the Xbox Live service using modified Xbox consoles. In most cases, these users have used the modifications to gain an unfair advantage over other players, such as racing modified, faster cars in Project Gotham Racing 2. By doing this, users are breaking the Terms of Service that must be agreed to when a gametag is created. The Xbox Live team will not tolerate this unfair activity and have taken steps to protect our community from this cheating.
Xbox Live has recently initiated additional security measures to ensure that those connecting to Xbox Live with modified hardware will be removed from the system. Modified consoles will be banned, and information about those banned machines will be tracked to prevent them from connecting to the service again.
Its important to the Xbox Live team that we provide an environment that is free of cheating and gives all players an opportunity to compete fairly online. Xbox Live constantly monitors for users attempting to bypass security measures and gain unfair advantages over other players, and will take additional action as needed."
Yeahhhhh, i bet they only did it to stop cheaters pfft