They better. It's stuff like this that is making me wonder if I should get a 360 or not. I have other people on my network using bandwith so that will make this even harder on me. I hope MS addresses this issue soon.
The only time I had issues downloading stuff was around last years E3, right after they released the halo trailer.
Other than that, its been pretty smooth sailing.
What kind of connection do you have (cable/dsl, etc)? Also, if you are connected wirelessly, make sure you dont have something interfering with the connection (hence the reduced d/l speed).
Finally, if you are with a cable company (like comcast) they might be having DNS server issues AGAIN (sorry, kinda bitter).
Honestly, with the exception noted above where Microsoft's infrastructure was overstressed during E3, the download speeds are quite reasonable. In most cases, the download should be saturating your connection, but do note that even at, say, a steady 200 KB/s, downloading a 600 MB demo takes 50 minutes!
Even with demos up to 1+ GB, it has never taken me more than 40 minutes to download them using Comcast's cable Internet. (It averages 20 minutes.) It sounds like it's an issue on your end, not Live's.
I use to have a crappy DSL provider and I didn't think it took long at all. I haven't tried it since changing providers and moving but my network speed is much better where I am at now so I would expect Live to run better.
It's been a little slow for me around TGS/X06 but before that it was fast. Haven't dl'd anything since X06 so I don't know if it's returned to normal.
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