Some beta testers of the upcoming Spring Dashboard Update for the 360 have reported that their system is incompatible with the new firmware and stops reading discs. Microsoft is apparently able to detect this issue via Xbox Live and is compensating affected customers by sending them a brand new Xbox 360 S and a year's free Xbox Live subscription.
The reason the problems may be occurring is that the impending update reflashes the system's DVD drive to be compatible with the new higher-capacity XGD3 disc format, set to start being used soon. It appears that some older DVD drives are incompatible with the new firmware and are causing problems to varying degrees. Apparently only a "minority" of console will be affected by this issue, however.
Nice of MS to get right in front of this issue before it becomes a problem. My guess is this affects the oldest 360s out there (I'm hoping my Jasper 360 is fine - I love that little white box)
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