I really don't think there's one way which is right. I think it just depends on the person. I can't put a vertical 360 into my tv stand. Many floor standing stands on DLP/LCD type sets don't have enough vertical space. I still believe that a vertical 360 has a higher percentage of causing disk damage as I mentioned earlier (basic geometry), but not high enough that I'd change it if I had mine vertical.
For what it's worth, I've never seen a scratch on any of my disk's on the 360 (or PS2/Xbox for that matter).

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