While i agree with your point in principle the other side to the argument is sure I'm also on my 3rd Xbox too but it's also always been plugged into my telly in fairly regular use where as My Wii and PS3 on the other hand are in a drawer collecting dust.
So, yes there was a massive problem with red rings, They responded by increasing the warranty and streamlined the process of replacing/repairing consoles (each time it's happened i had mine back within a week) And to me that's excellent customer service, while we might imagine everything in life should be perfect, it rarely is and as long as your issues are dealt with in a timely and reasonable fashion. Everything else they've done (short of maybe the stupid facebook and twitter apps) has been in my estimation far and away superior to their competition, and thats more of the reason why people "come back" (they're also usually getting a repair for free so its not costing them anything but a trip to the post office anyway)
We all agree on the necessity of compromise. We just can't agree on when it's necessary to compromise. -- Larry Wall