Please make sure you monitor your kids close when letting them play XBox Live or any online gaming.  The fact that a lot of the online games allow you to use voice this is a breeding ground for child predators to draw your kids as a gaming buddy and before you know it they are talking about meeting your kid.  If you think your kid is not vulnerable you are mistaken.  XBox Live is forbidden in my house unless I am playing other wise I make sure the game adapter is tucked away safe and sound and the XBox power cord is put up.  The bad thing about about the voice chat is there is no trail like there is in an IM conversation where you can track an IP address and use software to capture the text in the chat if you suspect things are not on the up and up.

Bottom line is take the XBox/Playstation/computer what ever out of the kids room, and make sure you are spending time monitoring your kids when playing online games. 

Have fun and be careful