I'm still on my first 360, purchased last Christmas and used constantly throughout the year. It technically doesn't start up with a hard drive attached (it claims it has insufficient power) but I found a workaround that's only a small inconvenience. When we thought the problem was with the hard drive Microsoft support was fantastic, sending us a new hard drive which arrived in a couple of days without needing us to send in the defective one (which I've now got working again). The high failure rate is definitely the biggest drawback of Microsoft's need to release the 360 as soon as possible, and even if they were essentially forced into it it's still good that they increased the warranty length for those specific failures.
Oddly, the only console I've had sufficient problems with to force me to buy a new one was the PS2, which was so plagued with disc read errors that manual laser adjustment couldn't fix it. The redesigned smaller model works fine though.
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