Well it seems Microsoft is going to be spending a lot of money again fixing their console issues. It turns out that thousands of Xbox 360's (the older version) are affected by an issue involving reading of their new disc format called XBD3. This new disc format holds an additional 1GB compared to older discs and was tested during Microsoft's Xbox beta test where Halo: Reach was given out for free using the new technology.
Unfortunately, thousands of consoles were affected rendering them almost useless and showing "Disc Unreadable" errors. These consoles will now be replaced for free with brand new $300 Xbox 360S consoles fitted with a 250GB drive and a free year of Xbox Live to boot. Lucky owners will surely be selling their consoles on eBay or getting a replacement and selling them on eBay.
Affected consoles appear to be those outfitted with Lite-on drives indicated by a yellow drive cable seen through a hole below the drive when the Xbox faceplate is removed. If you own one of these consoles, you may receive a message on the Xbox dashboard telling you about the console upgrade. Most reports are coming from owners of the 60GB Xbox Pro.