I'll tell you why. Swarms of fucking annoying little kids, especially in the more violent (and 18+... wait what?) games. Also too many creepy stoned guys and Internet thugs.
Not to mention the fact that things like ragequitting, teamkilling, glitching or griefing seem to be perfectly normal on XBL.
The day they invent bots with truely unpredictable, lifelike behavior is the day I disconnect my 360 from the Internet and never have anything to do with Xbox LIVE ever again.
Ok ok, for fairness' sake I must say that of course not ALL people on Xbox LIVE are bad, I have made a number of friends there (especially in TF2). But for every person I give positive feedback/a friend request, there are easily twenty people I have to give negative feedback/file a complaint on.
I've heard the "it's really just a loud minority that's bad" argument before, but sadly it's actually the other way around: there are reasonable, mature, friendly people on Xbox LIVE, but you have to get lucky to run into them. Don't believe me? Read the profile of a person selected at random from your recent players list and tell me if that sounds like someone you'd like to be friends with. At least in the games I play that's rarely the case.