I have both Xbox and playstation and throughout all Xbox's hardware issues I think this is far worse. To get to the point where your identity is at stake is a massive problem. I have also found that a lot of the gaming servers are frequently down on playstation which is also a rare occurance for xbox. I don't mind paying the piddly $89 a year for online access for xbox because to me their online services are far superior.
I find the online service to be a joke, Like banning dudes accounts that live in Fort Gay, MS: Xbox Live Fort Gay ban "a mistake" News - Xbox 360 - Page 1 | Eurogamer.net