You read it right; certain Xbox 360 owners may qualify for a replacement console due to the disc format being used in newer games. Microsoft was made aware of an issue where certain users were getting "disc unreadable" or "disc unsupported" when attempting to play their brand spanking new games. It was apparently an incompatibility issue with certain 360 units that didn't respond well to a recent software update.
For those users, Microsoft is proactively attempting to locate them through Xbox Live, but they are also encouraging users to contact them if they're having difficulties or issues. For those who qualify, a replacement 250GB Xbox could be yours.
If you're having any of these read issues and think your console may be affected, contact Microsoft at www.xbox.com/support/contact to see if you qualify.