I have had exactly the same symptoms as others on this list. I bought Colin McCrae DIRT, Video started to develop icky colours as if parts of the palette are missing. All of the textures dissappeared. Restarted the console, no video, all of the sound is fine, absolutely crysal clear. I have tried a new video cable and also switched from HD to composite. Absolutely angered and frustrated. I have had the console since its release in November 2005 and no problems. Clearly there has been some sort of ROM update which is causing the console to fail.
Expect I won't get a bean out of Microsoft, who are very unlikely to admit that there is a problem.
Microsoft if you are reading this and you care about your customers send out an ROM update that I can get onto my console