Most of the current aimbotting, wallhacking, cheating, server hacking etc.. is happening on the PC. I suspect thats what your hearing most people complain about.
They have hacked the client side hit detection, which enables them to send a packet to the server telling them that you've killed somebody, even when you are the other side of the map like so:
So the guy with 300 knife service stars, is sending the kill comand while he has the knife in his hand, thus counting as a knife kill. He's not of course knifing anybody, just standing around in his spawn racking up kills with the knife in his hand like the bloke above.
And that same hack that enables the insta kill enables you to do this as well :
Again hacking the client side hit registration to tell the server you have done 100 % damage with a single pistol bullet.
However, to install this kind of code on your Xbox you're going to need to have JTaged it or similar to enable you to get access to the OS. Most gamers wont have this kind of access to their xbox making them very rare. I've played over 110 hours and not seen one yet to put it into perspective.
Obviously the server code that they cracked is across all platforms, so it stands to reason that if they have hacked the code for the Dedicated servers on the PC, they have hacked it for Xbox as well.
DICE Know the hackers have hacked the server code which is why they just released R17 for the servers :
http://battlelog.battlefield.com/bf3/forum/threadview/2832654624834923228/1/
No idea if the Xbox servers have it yet, have we had any maintenance on the Console Servers yet ? i'm guessing because hacking on consoles is in such a minority compared to the PC, probably not.