It started having issues for select people almost immediately after they finished making changes for PayPal and account management. I started getting mass-messages about what was happening and ways to fix it, cause oddly enough it would still allow some people to get on Live, just not join games, parties, etc...
About 20 mins into helping a few buddies, BAM! I go down, check the Xbox.com support page, majornelson.com and my ISP. My guess is theyre laying some of the ground work for the upcoming dashboard update peice by peice and whatever they were adding amending yesterday caused a hiccup big enough to boot everyone.
Glad it wasnt down for long though