Someone had a retarded argument about wanting to play singleplayer games only and blah blah blah awhile back. The reality is that you're right, most people don't want a console or gamertag ban and will never risk this. It's just FUD people spread around to make the piracy situation on the PC seem less of a shitstorm than it probably is. I notice it's only ever brought up when a comparison is made.
While I don't think that the piracy situation is nearly as prevalent on consoles, it's really not that hard to get a modded console. A couple of guys I work with have modded 360s. One guy bought his pre-modded, and the other got a friend to do it for him. He just had to pay for the mod kit. I haven't modded mine, but that's mostly because I hardly play it except to play XBL Arcade games with my wife. I can count the games I own for it on one hand and that's after over 2 years, and a couple of those came with the system.
"The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts." -- Bertrand Russell (I think...)