The original line of XBox's where shipped with faulty thermal epoxy which was not strong enough to hold the heat sink on the processor - and over time and shipping it made only an 80% contact with the processor instead of full contact.
On warm days with frequent gamming use, the processor would over heat and cause permanent dammage - red rings. Because of the fault of the product micrsoft has extended the warranty from 1 year to i think 3 or 5 years (or something). If your XBox gets red rings, then send it back to MS and they will send you a new XBOX with a corrected heatsink / epoxy situation in which the problem should not happen again.
However, although you can send your broken xbox in for a corrected xbox - you are not allowed to send in your working xbox for the corrected version even if yours still has the defect. (this is stupid) and thus, in my oppinion, its better to have it happen sooner than after the warranty expires.
Second, XBoxes shipped after a cirtain time are already fixed - I cant remember the date but I want to guess it was back in like september maybe? An XBox from xmas should already be the new systems.
If you have an older system and wish for it not to happen to you, then do not use it when it is warm either by the suns doing or your furnaces. Allow plenty of air flow and do not stack electronics.
Hope that helps.