To be honest, I've only played Xbox Live when it's absolutely necessary -- as in, when I need to review a game with an Xbox Live component.
I remember being in the beta test for Xbox Live before its general release. I was playing Re-Volt with some game writers, Microsoft employees, and a few members of the general public. Even then I could see two things:
1) It's really fun to play online
2) Other people suck.
When I gave the controller and headset to my friend Katie, it took less than three minutes for her to hand them back to me. After learning there was a woman at the other end of the headset everybody dropped all pretense of civility and just became total a-holes.
She never told me what they said to her, but I can imagine.
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Oh, and I would be remiss if I didn't mention the antics of Xbox Nation's first art director Dave Z. Dave was a great guy, and he did some of the funniest routines I've ever heard on Xbox Live. He was never abusive, but he was certainly ... um ... unnerving.
"You like unicorns?" he'd ask the other players, making sure they were down with the "Unicorn Posse." Then, he'd tell everyone about what he had for lunch, and how our boss (who was maybe ten feet away in another cubicle) was pissing him off.
I wish I could accurately portray Dave's quirky sense of humor online. But I'll never forget laughing until it hurt when he played Xbox Live.