http://en.wikipedia.org/wiki/X...blems
normally wikipedia is a crappy place for reliable information but the majority of the claims here are fairly sourced. The keynote would be the fact that microsoft extended their warranty to cover the General Hardware Failure (3 red lights) due to an inherent flaw in the console. The RoHS issue as a reason is speculation on my part but working for a electronics company that draws about 30% of its revenue from europe I can tell you, rhos is a big problem. Brittle solder, whiskering, and corrosion are all problems that have increased greatly with almost every company that works with circuit boards since RoHS has gone into effect.
As for service, yes. I've had personal experience with Xbox service and MS service for other hardware and software (windows and a joystick) as well as with several other companies. The general doctrine for CS for most companies that market directly to end consumers is to get them to go away. Step 1 is usually telling the person to do something they won't bother with. "Unplug it for an hour and half then plug the things back in in precisely XYZ order" is a common one, and there are others. Step 2 is usually a lie about what they cover, step 3 is usually a lie about their authority to do it, it goes on from there.