Drewlowe: if you use a mod chip they don't ban your gamertag, they ban the serial number of the Xbox connecting to live if the system shows signs of modification (eg. modified bios or hard drive files)
The gamertag can be banned for lots of reasons, but I've yet to hear of anyone losing their gamertag for modding. They just aren't able to play on live using a modded box.
I own a modded box AND worked on an Xbox live title, so I'm not talking out of my butt