well my brother got the red ring of death. but it doesnt matter its so worth buying. if i didnt have a 360 when halo came out i would of bought a 360 just for that.so ya its worth buying even though the red ring of death is true but it didnt happen to my brother untill about three years after he had it. so if i where you i would go buy it.
Standing a system up causes no problems, it doesnt affect heat in any way, also, heat sinks cant malfunction, they are just heat sinks, pieces of metal used to cool the cpu and graphics chipset. But I guess you could say they didnt use enough heatsinks, or a good enough heatsink in the original system, the CPU itself is also a problem since it would get hot easily, thats why they replaced the new 360's wit hthe falcon chipset to make it run cooler, plus there are more heatsinks when I popped one open. (thus voided the warranty of my friends 360 )
My friend still has her 360, and it's a 1st gen. 360. She keeps the 'Box on top of her uber-awesome sound system, which is inside a cupboard.
Make sure there isn't any dust in your 'Box. I think dust can give you the rrod.
Dust accumilation can cause a static electricity problem, some PC's are too dusty, they just wont start, same for the 360, another problem is that dust can also just help the system heat up, more crap in there to heat up easily, just more heat to kill the system.