I'm not into Microsoft's consoles (I'm not into Western games or FPS), so this doesn't affect me very much. Although I do own an Xbox and I plan to buy a 360 in the next few years. I'm way more into Nintendo and to a slightly lesser degree Sony.
This just isn't a direction that I want to see console gaming headed in. I can go put in Space Invaders (2600), Super Mario Bros, Streets of Rage, Ocarina of Time, Crazy Taxi, or Halo 1 whenever I want. Those games will always be available to play. If the Durango is online only then that means at some point, after about 8-10 years when support of the console is discontinued, every single game released for the system will be unplayable. Could you imagine if all movies or songs or books ceased to exist after a decade? That's a fucking nightmare.