Nonetheless, until M$ allows modded xboxes on live (which isn't going to happen) I don't care how cool they make it, im not giving up my homebrew!
I haven't used live before so I can't tell you for sure but I can tell you about my time using xbconnect and why that was crap. It was impossible to find anyone playing a game I wanted to play, so I ended up playing halo even though I hate it in multiplayer. Even though I was on a 3MBPS university line it still lagged like crazy. Everyone else was talking and I couldn't hear them, or talk to them since I have no headset (for xbox). When the game was playable I got owned because everyone was infanitly better than me (on account of me not playing that game since I hate it). Xbox live fixes all of those issues with matchmaking, game specific contests & rooms, less lag since its on their server, and making everyone use the headset with voice masking.