I hate developers releasing glitchy code. Before you all go flaming me, I think a demo shouldn't lock up or anything of the sort. A demo is a 'demonstration' of a game. Before a demo is released, core code should be locked down and a little play testing should have been done. Developers do themselves no favours at all releasing buggy code, let alone code that brings a system to a halt. I was really looking forward to this game and after experiencing the same lockups, it's made me think twice about a purchase. If they throw out a demo for people without any real quality control, what makes me think they won't do the same with final code?
It's clear this demo was rushed for E3, but there's no reason why they wouldn't throw out a final product in the same state and then patch it later like so many PC developers have taken to doing. Patching games over Live is a both a blessing and a curse to me. Yes, it makes it easier to fix annoying glitches that are discovered after launch, but it also means developers can save money and go easy on testing knowing that any show stopping bugs can be patched later.
There's a lot of buggy games out there for 360 and we can only hope the situation improves and we don't see a rush of patches like PC games, where we need to have version 2.3.1114 to get online.
BTW, the locking up on Test Drive Unlimited does seem to be online related as I didn't experience the lock ups after pulling out my ethernet cable.
Just my opinions, no flaming required.