The talking heads at the Gamerscore blog posted an official response regarding the 360 hacked story:
The core security system has not been broken. However, it is reported that the authentication protocol between the optical disc drive and the console may be attacked, which if accurate could allow people to play illegally copied games. Our security team is aware of this and we are investigating potential solutions to this issue. The Xbox 360 platform was designed to be updated, and we are prepared to respond appropriately should any unauthorized activity be identified.
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