Most overated: Call of Duty 4 is the most overrated game on the X360 I can think of at this point. The single player was phenominal and challenging but the multiplayer is nowhere near the quality and balance of another shooter I can think of. (This isn't a fanboy statement because I have equal pun with both CoD4 and H3. A topic for another thread though.)
Most underated: That would have to be Bioshock. By itself it's one hell of a game, it took even me by surprise. Great story, great gameplay and very challenging. Other RPG developers should take some hints from Bioshocks ambition and strive to make games of that quality.