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Seems like a really easy fix, just change it so it *always* says "the e-mail address or password is incorrect". Problem solved.
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I'm glad I have no words in my password, and it would be so long it would take ages to bruteforce it online... MS' scumminess is compounding though, because when they autobilled me for more XBL, even after I canceled it, I couldn't remove my card number from their DB because the link to do so never worked. I only got it off by card expiry, and even then, some have reported MS would just guess the new expiry date and keep billing them.
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...so even people who don't want their CC number on their account could get stung if hacked.
For the PSN hack, I think the response was pretty reasonable - to make a press release instantly would hurt their image, hurting their shares, hurting shareholders, and if they were wrong, it would be disastrous. Once they realized they'd really been hacked though, they took the system down at tremendous cost to them and their partners to fix it properly.
