It's not really a rip-off if you order the 12 month code off of a none M$ website and it can work out at 8p a day. And that's not much for people without jobs or kids. Or it's about 11p a day if you buy a year straight from MS which still isn't exactly extortionate.
And the money, or most of it will go towards a somewhat stable environment for your Xbox online. The servers barely ever go down and whenever they do for a day or two, M$ will usually compensate you with a free arcade game(however crap it may be :P it's still worth more than a few days XBL). And connections to the Xbox Live servers are usually quite good depending on your own internet connection. You only see other people lagging when they have a poor internet connection at the time. Compared to the PSN or PC I see a larger amount of people lagging all over the place. Paying a small amount of money each year for an overall better quality of service is fine by me.
Doesn't Sony also offer a PSN premium service for £50/$60 a year now?