Actually, no, XBOX LIVE was not hacked.
What happened was the SEGA website's SEGA PASS accounts were hacked, and a select group of people who used the same login/passwrod for SEGA PASS and XBOX LIVE then had their XBOX LIVE account stolen which is the fault of both SEGA's leak and the user using the same password across both services. Using the same tactic, they stole the facebook and email accounts of some of the same users.
This has nothing to do with XBOX LIVE at all, really, because there is no way Microsoft could force people to use different passwords across all their accounts. They do encourage this, but many do not listen.