I think we need a class-action lawsuit. It's clear that the hardware problems with this thing far exceed what's acceptable. And to make matters worse, once you swap consoles, using any downloaded stuff you paid for is a special problem, since it's tied to the drive and the console. I hear you need to be logged into Live to be able to use it, something that isn't required normally (or abnormally, if the failure rate is high enough). You may be able to get past that by deleting ard re-downloading everything, but still, what a frigging nightmare.
I don't see what difference it makes whether you have it upright or not. I've heard just as many horror stories from guys who lay it flat. Mine's upright, and I've used it very heavily since I got it. Some games have locked up on me, and I think that's a combination of disc reads or seeks failing one too many times and the game's streaming software sucking. This opinion gets a boost from TDU, where I'll occasionally drive off the end of the road and fall into lala land, when the next chunk doesn't stream in soon enough. But the game's disc dealings are robust. Instead of crashing, it goes to a loading screen, and puts me back on the side of the road where I fell off. I know when I need to get out of the game, then eject the disc and "re-seat" it. The spin speed will drop dramatically, meaning there's trouble reading it. When everything's up to snuff, the spin speed is consistently high. (It sounds like a fan.)
This is cheap hardware, as cheap as they thought they could get away with. They went too far, and that's why Microsoft's financial picture is reeling, from the cost of warranty repairs.