This may or may not be useful -- read at your own risk.
The Xbox 360 is notorious for the RROD (Red Ring of Death) problem. Apparently overheating causes the motherboard to warp out of shape until it finally just doesn't work.
Me, I was dealing with overheating problems while some of you BYONDers were still in diapers. I had a Commodore 64 in the mid-80's and, after a year or two of faithful service, the power supply started overheating regularly. I've been paranoid about overheating ever since then.
So, when I got my Xbox 360, I set it up in the "flat" (horizontal) configuration. I put it on a stand next to the TV rather than stacking it on a confined shelf under the TV. But that's not all I did: I also took two PS2 DVD cases and set them underneath the edges of the 360. So underneath my 360 there's a half-inch of open air that most 360's don't get.
As of this writing, I've had my 360 since May 2006, about 8 months after the 360's release (http://www.byond.com/members/ Gughunter?command=view_post&post=12442). It still works fine and I'm sure I've accumulated at least 1000 hours of gameplay time on it. Is its longevity due to the extra half-inch of airflow? I don't know -- but at the very least, I don't think it hurts.
If you're already suffering the Red Ring of Death, you may want to Google "360 Towel Trick." It's hard to judge whether this is effective or an urban legend, but it could be worth a try. And don't forget Microsoft offers a 3-year warranty against the RROD.
Update: I watched a Towel Trick video on YouTube and the guy had his 360 sitting ON A CARPETED FLOOR. Whatever else you may do to the 360 -- or any device that may be liable to overheat -- setting it on carpet is BAD!! NO COOKIE FOR YOU
Further update: I posted twice in the same night so my wonderful roundup of October's open-world games (http://www.byond.com/members/ Gughunter?command=view_post&post=48725) got bumped off the Members page. If you like open-world games, check it out.
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