"Following a recent update to our system software, we have become aware of an issue that is preventing a very small number of Xbox 360 owners from playing retail game discs," said Microsoft
"This issue manifests itself a as a unique 'disc unreadable' or 'disc unsupported' error on the screen. We are also able to detect this issue over Xbox Live and are proactively reaching out to customers that may be impacted to replace their console."
Microsoft is encouraging customers who suffer from the problem to contact them via the Xbox.com website, so that a replacement can be arranged.
360 firmware incompatible with older consoles | News