The latest update to the 360's firmware obviously made it capable to use the new Kinect device, but there was, apparently, another feature added that will have a bigger impact... on pirates. Along with the motion control support, the fall update added new copy protection technology that locks out "backup" games from Xbox Live, and even stops copied games from loading at all.
According to hackers who have looked into the matter, "challenges" to the DVD drive's firmware are embedded into the security sectors on the game disc. If they don't match, the console is flagged for banning on Live, and the game will not load, although original copies of the disc will continue to work.
This forces hackers to choose between never updating their system (and never using Live), or playing legitimately like everyone else.
I expect massive numbers of banninations in the next few weeks, as Microsoft sorts out the pirates. I also quite expect a "response" from hackers, who will almost certainly find a way around the measure before to long... and the endless cat and mouse game will continue.
Also: Don't pirate. It's lame.