DS1 had heard of this before and it struck us tonight - our XBox is now toast (microsoft website - they don't call it the red circle of death, humourless buggers!
Luckily DS1 bought a second-hand one from a mate a few weeks ago (wonder how long before that one is toast...???) because apparently you can wait 4 weeks for them to fix it.
Microsoft have extended warranties from 1 year to 3 for this so at least it is covered but still...anyone who's thinking of getting one this Christmas, you might like to get a Wii (if you can find one) or a PS3 (if you can afford one) instead...
Ours came from Play.com last Christmas, I'm wondering if I can insist on a new replacement instead of a repair - anybody know? Play don't appear to have a contact email so I'll have to ring them in the morning.