The XBox hacking scene is impressive. The XBox is a $150 multimedia PC with DVD, hard drive, TV output (including HDTV), 100Mb ethernet, a really nice game controller, and enough CPU and RAM to run interesting programs.
XPort is also impressive. One individual has ported about 20 different emulators from Windows to the XBox. Gameboy, Nintendo, Playstation, Atari 2600, Intellivision, Apple ][, etc etc, all running neatly. Quite an achievment.
Many folks have speculated that Microsoft's plan with XBox is to slowly move Windows into the living room. The existing XBox hardware is already sufficient to do this, it's just the software isn't readily available yet. The hacker scene is about a year ahead.