I'd suggest you go for the 350D and spend your money on good glass.
You can always change the bodies, but the glass will stay with you.
There is not much difference between the 400D and the 350D, so get the 350D and upgrade to a full frame/semi-pro body later.
I was worried as you are, but I gave mine to local guy who owns a games shop here. He had it fixed in under 3 hours!
Works perfectly now.
Btw, mine is an NTSC-J console and was purchased much before the 360 was officially launched in India.
My mobo had some problems recently and I got it replaced.
I changed nothing on the HDD, but it gives me the disk boot error when I tried to boot from the HDD.
The only thing I did do was connect it to a SATA to USB enclosure to retrieve some data from it. I din't change anything, just copied...
I'm on 3.71 M33 and the came runs nicely. No lagging anywhere whatsoever. I think the lagging issue is related to using compressed (CSO) files. Just use the nromal ISO and it should run fine. Also make sure you have the CPU settings and everything at default.
Sync everything before upgrading. Your contacts, calendar entries, SMS, settings, etc will stay when you re-sync from the backup after upgrading.,
You will obviously loose your apps and will have to reinstall them.
Stay away from it!
It's addictive.
Alright, I know it's cheesy but I had to do it.
It's a great game, but make sure you have lots of time on your hands.