no it doesn't!i have one and it never freezes!!!but a friend of mine has a xbox and after 2 weeks since he bought it the «ring of death» appeared!lool
I think both systems have merit in different areas, for great "live actiona" games and Sports games the Xbox 360 cant be beat, and for graphics and upcoming games the PS3 is in the lead.
i have both systems :P and so far no problems with either one ^_^
As i said, Xbox 360 is the system for "Live action" games (aka online games) while the PS3 is better at High graphics, Games. It really isnt a fair compairson to judge the systems solely on their performance online. When you compair two things, you should take all the factors into account. (although you ARE right, the Xbox's "Xbox Live" is far superior to the PS3's internet system)