One of ours had the red ring of death, it was annoying, but not that big of a deal. Microsoft sends you a box, you put it in the box, and send it back, it costs you nothing. You get a 3 year warranty from the date of the last service, so that's huge.
Great games, fun to play, and it has a whole lot of tricks other than just games. We have one upstairs that really only ever gets used for streaming music and photos and video. We had a little streaming device upstairs already, but the 360 does such a better job, we got rid of the old one.
I'd highly recommend.