[GVIrish]

"It also increases the consequences of getting banned by the XBox staff. Not only can't you go online for multiplayer, you can't play your subscription games either."

Sounds like a classic case of "this is feature not a bug". With this system the stakes will be significantly raised for those who are verbally abusive on Live. Although admittedly I don't know if increasing penalties for the riff raff will improve their behavior or not.