Cons: voiding your warranty and not connecting to xbox live
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Pros: you have a hacked xbox 360 and can do pretty much anything

Cons: if your caught, your live is banned. Microsoft is really cracking down on this type of thing so it is not worth being banned.

Your warranty is voided, so if you were to ever get red rings..... Best of luck.
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First of all, you must realize that it is illegal to have copies of a game you do not personally own.

With that said, the pros are:
* You would no longer need to purchase games in order to play them.
* You can also play games that are not in your region (i.e. Japanese imports).

The cons are:
* You can get caught by the FBI and are fined and/or jailed, though it's a fairly low chance of that happening.
* Your Xbox 360 and your Live account is banned. If so, you can purchase another 360/Live account. This has happened to quite a few people already though it doesn't happen to everyone. I know of some people who connect to Live and yet play copied games and are still online.
* You stress the DVD laser on the 360 to the point that it fails. If you use bad or cheap media, it can cause undue stress to the laser.
* 3RL syndrome. Of course, this happens to non-modified 360s. Too often, in fact.

Hope this helps.
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Background: I own two Xbox 360s, one for myself, one for my son. All of my friends have Xbox 360s.

Here's the thing that makes piracy on the 360 stupid: it doesn't add up. You already spent a lot of money on the console plus the Gold subscription. As you play more, your gamerscore goes higher and you stand to lose more by getting banned from XBL. We already had one contest that was based on your gamerscore, and it was a wild success so it is only a matter of time before they try another one.

On top of that, at $60 a pop even the crappiest of games gives you a better bang for the buck than spending the same amount of money on movie tickets or whatever.

Examples: if you play Oblivion, that one $60 will usually suck you in for no less than 100 hours. That's 100 hours of entertainment for $60. I have already played through that game at least three times, that's over 500 hours of great entertainment. Hell, I broke the disc by accident and got a trade in Goozex.com for about half the cost, so that's over 500 hours of fun for less than $90.

Another example: if you play Halo 3, that's another time sink. $60 and you can basically spend years playing on XBL without getting bored. My best friend is a degenerate Halo 3 addict (he is worse addict with Halo 3 than what I am with Oblivion) and he is still NOT bored of Halo 3!

Yet one more example: The Orange Box. That was the best bargain in ages: Half Life 2, two extra episodes of HL2, Portal and TF2. People would had been happier to pay $30 just for Portal.

Pirating any of these games means finding the binary, downloading and ripping it properly, tampering with the 360 automatically losing warranty coverage, and getting yourself and your 360 banned from XBL. It's just not worth it for $60 and the risk of criminal prosecution. It doesn't look like much to you, but you never know when some miscreant district attorney with political dreams is willing to throw a dumb gamer kid under the bus for political game.

If you can't afford the $60, rent the game.
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