Prepaid XBox Live Subscription cards are eaten by the service if your passport account has other premium Microsoft services attached.
Several XBox Live subscribers are in a suspended state, awaiting Microsoft’s help. The problem has been around since day one of the XBox 360 launch(I’ve been affected since 11/23/05). Depending on the duration of the service purchased and whether or not they purchased a headset, some users are out as much as $70. Also, misguided suggestions from customer support have resulted in people losing game saves.
Major Nelson(XBox Live representative) said on 12/1 that a fix was being tested. That was 16 days ago. http://forums.xbox.com/2/1145218/ShowPost.aspx#802691
John Tokash 
Same issue here, mine worked for 2 days, then I called Xbox Support on 11/25 and initally was told if the issue wasn’t resolved in 24hrs., please call back in 48hrs. Needless to say I did so. Since then I have called a dozen times, had 3 tickets opened, one of which was completes missed documented.
I was told by one of the very few support reps that are aware of the issue (I guess Microsoft or Xbox don’t find it worth wild to alert their staff to any known issues, because out of the 12 times I called only 2 people really knew or understood the issue) that the issue is being looked into, it “hopefully” would be fixed by the end of December, if not the beginning of the year (Jan), if not pleae call back.
On more then occasion I was also promised a call back, none of which ever were followed through on. Support reps say that they are “sure” MS will compenstate all members who are effected…we will see about that.
Also if you are like myself and tried going throught MS, and explaining your issue, they will only bounce you back to Xbox as the root cause. Which may be the case, however Xbox support reps have told me that this is not just an issue with Xbox, but with the MSN Premium and such other paid MS services.