If you've been thinking about using your Xbox 360 as a DVD player, you'll probably want to check out this article at ExtremeTech first. According to their findings, the console's DVD playback is seriously flawed.
To say that the Xbox 360 is a "decent" DVD player, as we have seen reported in so many places on the 'net, is giving it way too much credit. Frankly, it's a terrible DVD player. Hopefully, this article has provided you with enough evidence to compare Xbox 360 DVD playback with other consumer electronics (and even PCs) and see what you're missing. It's true that not every DVD exhibits the sorts of problems highlighted here. Many don't have any particular errors to speak of. But "many" isn't good enough, and there are enough DVDs—popular ones, at that—with serious problems.

Even those movies that play without noticeable errors don't look quite as good as they should. Though the 360 is limited to 480p through component, in compliance with the DVD Forum's regulations, the images tend to have a bit of a blocky and over-sharp look to them. Microsoft's gaming box does a good job of preserving detail, but it sometimes looks a bit rough. It's like playing a game at low resolution without antialiasing.
The screenshots ExtremeTech has posted show that there are definitely some issues with the Xbox 360's DVD playback. If you'd like to read more, the entire article can be found here.