Id sue microsoft if all I did was mod my console to play media extensions they dont support because they are to cheap to pay.

Modding isn't piracy. Those consoles were banned because they're were modded, not because they were used for piracy.

I hate Microsoft even more due to the way they handled this. I'm sure there are many people that had their consoles banned without a fair cause. Modding a console is not inherently evil. The terms of use excuse is a complete kick in the nuts of consumers.

Think about it, simply changing the faceplate of your Xbox 360 is also considered modding, and yet Microsoft doesn't attack the companies that makes and sell those plates. The reason why? It makes them money.

The thing is, Microsoft bans all the type of modding that doesn't give them money. You may put a new faceplate, but you can't make any other changes or you'll either get your console banned or you'll breach the terms of use and never be able to get you console fixed for free.

a lot of console mods actually arent about pirating. Its about enabling different things. Like say installing Linux or Windows. Changing the exterior to a cooler case/add case lights.

you people are mixing up MODDING and PIRATING. They are two different things.

Modding isn't piracy. There are alot of people that are involved in modding and do not make foul play.

Also, isn't it just that the *console* is banned from Xbox Live?

Were the user to purchase a new, unmodded console, they could hop right back on Live, correct?

This, exactly.

If MS had breached the contract then those people would have to get their money back but the console modders (which isn't illegal, just against terms of use, pirating is illegal) are the ones that broke the contract so they get nothing back.

And I'm sorry, I know people love to say modding != pirating, but for the most part, it does.

Yes, there are some people who mod their consoles and pirate nothing but it's just mainly one of those excuses like "I only have backups, not illegal copies" that's generally just bullshit.

In the end it really doesn't matter since they are the ones going against the terms of use and it's their own dumbass fault.

I already stated why gamers will continue to lose out, but I'll say it again.  More and more unnecessary restrictions will be placed on the hardware and software we're purchasing in order to limit consumer's options.  The PSP and the iPhone is a great example. 

The PSP out of the box is actually a pretty boring tool... But a PSP with CFW and the ability to play creative homebrew, your favorite old games from the past as well as the hottest new portable releases and it starts to come to life. 

The iPhone is quite similar.  Tons of possibilites go unrealized until you jailbreak and unlock the firmware.  In case you didn't know, the US verstion of the iPhone is currently locked to a single carrier... and how is that at all beneficial to us as a consumer?  I'll answer that one for you, IT'S NOT.  It is simply a financial agreement made solely to benefit AT&T and and Apple.  The consumer is only being considered as a source of revenue, and the companies are able to get away with these uncompetitive restrictions simply because there is no other simple way to attain one.

then you deal with losers.. seriously... stop generalizing. Its like walking into a bar full of nothing but men and calling everyone there homosexual.

this is modding

Perhaps I missed something here, but in order to mod your 360 and still be able to use it on XBL, you have to get a modded copy of the MS bios...which is illegal. So whether or not these people are pirating makes no difference, they were still breaking the law.

umm... not really... since all pics above use 360 hardware with changed cases/setups.