Eh, when my launch 360 died (last nov/december I think, right after they extended the warrenties on early/launch units) they had it back to me in 2 weeks, during a busy shipping season. The phone process was quick and painless.
I have a mod'd xbox that still works fine to this day (mostly XBMC, some emu stuff, some old xbox games).
I had a PS2, that died a week after modding. The installer could find nothing wrong with it.. no blown fuses, nothing burnt, uninstalled the mod and still no good. I've gone through several dead PS2s trying to put together one from peices that works even w/o a modchip, and finally gave up. I should have just bought another new one, except you can't get ye olde big PS2s new already at the time I was trying to do this.. stupid slimlines.
I think I'll probably do like a friend of mine did, import a PS2 from Japan.. most of the ones on yahoo auctions aren't as abused as US consoles.. then mod that. I still haven't played MGS3, or God of War, and a few other titles.. plus there are several titles I'd like to play again. Most of the titles I want to play though, weren't even released in the US ...
My NES will probably work once I get off my ass and clean the contacts. SNES is fine, Dreamcast #2 is fine (the first one developed an overheating issue, after I opened it up out of curiosity.. funny thing is, nothing is visibly wrong with it).. Playstation (original) is fine after replacing the lens assembly.
My 360 has probably seen more hours of use than my PS2 did and probably more than my Playstation.. not as many yet as the NES or SNES, however.
So I guess there's a "problem" but part of it is, every single person goes online and whines when something happens, and there's no feedback from people who have zero problems. So it looks worse than it is. And in fact, MS is really great about replacing dead consoles (within warrenty) and will ship you a casket pretty quick, all you do is arrange pickup or take it into a UPS store once you have packaged your 360 according to the (simple) instructions. Wait a few weeks, and you're good.