During the holidays, many people who were already using Xbox LIVE noticed some problems with the service.  With the influx of new people coming online, the Xbox LIVE service just couldn't handle the load.  Many people were pissed. Personally I see it as just something that happens and people should get over it, whether you pay $50 per month or not. It's still a sweet system and it's not like you were horribly inconvenienced during the process. In any case Marc Whitten, General Manager for Xbox LIVE had the following statement:

"During this past holiday season you helped us break a number of Xbox LIVE records.  This included our largest sign-up of new members to Xbox LIVE in our 5 year history and just yesterday you broke the record for the single biggest day of concurrent members ever on the service.  

As a result of this massive increase in usage we know that some of you experienced intermittent Xbox LIVE issues over the holiday break.  While the service was not completely offline at any given time, we are disappointed in our performance.  I would like to take this moment to thank you each and every one of you for your patience and understanding as our team has worked around the clock to return the service to a stable state.  

At the same time we would like to offer a token of our appreciation to all of you in celebration of record success for the service.  And as a thank you for your loyalty during this holiday period, we will be offering all of our Xbox LIVE members around the world access to a full Xbox LIVE Arcade game that will be available to download free of charge.  In the coming weeks we will be sharing the specific details of this offer with you."

Thats not a bad offering at all. Thank you Mr. Gates :)