Last year Microsoft retroactively extended all 360 warranties to a full year from purchase, and now they've made some positive changes to the warranty terms (some of which I benefitted from when my 360 croaked), including:

Free Shipping: In the event your console needs to be returned to us for repair your shipping costs are free. We will immediately send you a postage paid container in which to send us your console, and we will pay for shipping charges to return your console to you.

New Post-Service Warranty: If we repair your Xbox 360 within the original warranty period, you will receive either the balance of your original warranty, or 90 days, whichever is longer. In addition, we will now pay for the shipping both ways.

If we repair your Xbox 360 after the warranty period has expired, while you will be responsible for the repair costs, your repaired console will be returned to you with a new, one year repair warranty.

Return of Original Console In either an in warranty or out of warranty situation, most customers will now receive their original console back from Microsoft.

2. Faster Service We are implementing an expedited repair process; upon receipt of the console, Microsoft will repair it and ship it to you within five business days.

It's a bummer if (when?) your 360 breaks down, but it's good to know that Microsoft is working to improve the repair process. You can read the entirety of the update at Xbox.com.