I think having a "hackable" console frees you up to buy non-hackable console as well.
It was big enough of a merit to make me buy a 360.
MS is also very soft on pirates. They don't really ban people, at least not updating firmware for 2 years and connecting to Live while playing backups was not enough to receive a ban.
I guess you'll have to mess up big time to get a ban. Haven't heard of/met many people who got banned since 2007 except people who played GOW2 review copy and/or played a few other leaked games early online which were clearly asking for a ban.