According to Whitten, any title that is six months old, with an average Metacritic score below 65 and a demo-to-full conversion ratio below 6%, will be pulled from the service. Concerned parties will be notified three months in advance if a title is going to be pulled.That's your solution Microsoft? Just pull the title? What happens to the person who needs to re-download the game, because their Xbox 360 red ringed for the seventh time, but now the title they bought is gone from the service.
Here's a better idea. First off, allow user ratings. Users should be able to rate games, like on YouTube. This will allow the community to tell each other what games suck and which are awesome.
Secondly, offer sorting of games by "channel". An example could be the Indie Channel, where all the independent games go. People who are interested in those games could check that channel. It would be like the Fox Searchlight label that is used by 20th Century Fox for smaller, indie movies. There could be other channels, such as the Comedy Channel, Horror Channel, etc. Microsoft could still allow people to sort by genre, but allow sorting by this channel as well.
The advantages of this is that people may start gravitating towards channels as they prove themselves. Maybe someone plays N+ and realizes, hey there are other games in this Indie Channel I also like. It also allows people who don't care about those games, and would rather play Yaris to do that.
The biggest point here is that one massive list (or multiple massive lists by genre) is useless to go through. It's a usability nightmare. I have no idea, without searching the web or hearing from friends, what is good and bad on Xbox Live Arcade. Since so many games aren't that good now, I just default to not trying a game unless I hear I should. Or, I check the full game out for free at work (Xbox 360 dev kits connect to PartnerNet, which has the majority of Xbox Live Arcade titles on it available for free, including yet to be released titles. It's used for testing mostly, and is one of the nice perks about working on console games).
I think organizing games by channels and allowing user ratings are great ideas, and is a better alternative than just removing games from the service. That's a pretty poor way to handle things, especially for people who may have bought the game. If your reasoning is that you want people to be able to filter through the crap, then don't let it get in there the first place. At least put in real measures to let others inform each other how good/bad something is.
Of course, since Microsoft gets a piece of the pie for all games sold, this won't happen...