I recently had my xbox modded and at first I was having reservations about it but now, I think it's the best thing I've ever done for it. The xbox at my house is used by my entire family and we have a very extensive collection of games, but now with a 120 gig HD I've copied the most used games onto the HD and the kids don't even need to get out their dvd of simpsons or toejam and earl. They love it. Plus there's some homebrew versions of classic games like pacman and digdug that my wife loves to play along with her tiger woods and gauntlet legends. But by far the best thing has to be Xbox Media Centre. This little gem of software is real great, it allows the xbox to play media off my main computer via SMB. so now instead of having to go to my pc, the family just turns the xbox on and they can play mp3's or movies that are stored on my pc regardless of wheter i'm on it or not.

Either way, I higly recommend modding your xbox if you want the most out of it.