The Ars Technica piece about the issues includes terrifying details like witches spawning in the safe room and giant player characters. (We're told there's also human sacrifice, dogs and cats living together and mass hysteria.) Witness the horror for yourself right after the jump.
Update: Valve just wrote us to say that the problem has apparently been fixed. "Valve has released a server-side fix to deny the recently reported cheats on all dedicated Left 4 Dead Xbox 360 servers. The fix is designed to halt the cheating behavior on the dedicated servers, which accounts for the majority of the co-op and Versus modes of play. A title update for those playing on user-hosted servers and/or via system link will be released in the coming days."
[Via Giant Bomb]