A letter from Marc Whitten was recently posted talking about the discontinuation of the service (abbreviated form below)

On April 15 we will discontinue the Xbox LIVE service for original Xbox consoles and games, including Xbox v1 games playable on Xbox 360 and Xbox Originals.

There’s no greater example of the power of the Xbox LIVE community than the “Halo” franchise. “Halo 2” has had an amazing run on LIVE, with a dedicated community more than five years after launch and well into the next generation of consoles. It has fundamentally changed the way we play video games. And while it’s difficult to see that run come to an end, the “Halo” franchise continues to act as the benchmark for multiplayer gaming in this generation, with “Halo 3,” “Halo 3: ODST” and soon “Halo: Reach” on Xbox 360.

To reach our aspiration, we need to make changes to the service that are incompatible with our original Xbox v1 games. We will contact the Xbox LIVE members directly impacted by this change and if this includes you, I encourage you to check your LIVE messages and associated e-mail account over the coming weeks for more details and opportunities. We view you as a partner in this process.

We’ll share more details soon, but in the meantime I want to assure you that the best is yet to come for Xbox LIVE. I believe we’ll look back on 2010 as a landmark year in gaming and home entertainment, and I couldn’t be more excited about what we have in store with “Project Natal” and LIVE. The LIVE community is the driving force behind everything we do, and it’s because of the community that ground-breaking experiences on Xbox continue to be

Giving up the ghost of the past to embrace the bright shiny future of Natal. Not a terribly sad day really.