Being on the bleeding edge certainly implies the risk of being the guinea pig for the rest of the market. The more complex the products get the more likely you are to run into early run problems. I hate to even look like I'm defending M$, but I'm sure they put their development units through plenty of testing; but however much testing you do there's always going to be something missed you don't find out about until it hits the market--again the more complex the product gets the more likely this is. It's up to the customer to decide what is more important: being the very first kid on the block with the new toy or getting a more reliable, thoughrouly tested product at a reasonable price.
I think the lawsuit is ridiculous, the first thing is to try and get a replacement or refund. IF that is refused, then he has a leg to stand on in court. It sounds like the first knee-jerk reaction was "gee it doesn't work, SUE THEM! cha-ching!"
I'm not on the XBox bandwagon, but once the PS3 comes out, I'm waiting for the initial rush to die down & let prices drop to a reasonable level while allowing the gotta-have-it-now people do my final testing for me.