It(360) will scratch disc's if your try and move it when the disc is spinning, also if you knock the area where the 360 is it will also scratch the disc as M$ descided not to put 4 cushions to stop the disc from scraping the len housing. Other than that if you dont knock it wont scratch your disc's.
Yes the live arcade has some very good games. Might I recommend Assualt Heros, Geomarty wars, UNO, DOOM.
P.S I'm sorry for any spelling mistakes tonight, I cant seem to type correctly.
It will ruin your discs if you move the system while in play. I've had to replace Call of Duty 4 three times already. And yes, the live arcade has more games then you'll ever want to play in a life time. The 360 is a worthly envestment.