We interrupt the fun and merriment to inform you that late last night, Major Nelson confirmed what a lot of people were reporting in message boards, forums (and to our tips) — there's some spotty connectivity issues in Xbox Live.
In the past few hours, the Xbox Operations Centre noticed that large number of members were disconnected from Xbox LIVE, some more than once. Our Engineering teams are actively working to determine the root cause of this issue and to prevent it from happening again. If you are disconnected, you should be able to reconnect after a few minutes. Thanks for your patience as we work quickly to solve the issue.
Also, Xbox Live's status as per the official Xbox site:
Users may experience issues connecting to Xbox LIVE. If you are disconnected, please try again in a few minutes. We apologise for the inconvenience and thank you for your patience.