Since I've had it, my 360 has frozen up on me from time to time. It never had the problem with some of the games I rented, like Kameo. But it has frozen during NFS:MW, Gears of War, and especially Oblivion.
The last tends to freeze up at predictable times; like when I'm running (Agility maxed = very fast) through a heavily wooded area, with "Detect Life" active, my bow knocked, aim zoomed, and I turn quickly as a monster leaps at me. I can understand the freeze...that's a hell of a lot being processed at once.
But I have to wonder if it's really unfeasible for freezes to be preempted. Is it not possible for a game to prevent the realization of a software event (user command, high-tier graphics effect, etc) if that event will exceed available processing capacity? Surely, few gamers would object to the replacement of a momentary graphical glitch (ex: shadows or shaders being turned off) in the stead of a freeze (requiring a reboot). Is it not possible for such a fail-safe mechanism to operate quickly enough without demanding too much of its own processing power?