Looks like the rumours are true, Microsoft is banning consoles from connecting to Xbox live once again.
As discussed in our forums and various other sites around the Internet, people were getting their consoles banned on suspicion of playing pirated copies of games. Major Nelson, who is the director of Xbox Live, confirmed on this blog that the banning of consoles is occurring. Below is his blog post:

I’ve gotten a few messages and seen some forum threads pop up on console bannings so I thought I’d post and let folks know what’s up. In our our continued effort to keep gameplay safe and secure for our community of more than 14 million members, Microsoft has taken action against a small percentage of Xbox 360 consoles that have been illegally modified in order to play pirated games. You should know that modifying your Xbox 360 console is also a violation of the Xbox LIVE terms of use, will void your warranty and result in a ban from Xbox LIVE. The health of the video game business depends on customers paying for the genuine products and services they receive, both from manufacturers and the local companies that support them. We will continue to employ and bolster anti-piracy security measures to counter piracy in the gaming industry and improve security in the Xbox LIVE community.

Source- Neowin