Teresa, a former Xbox Live user was harrassed by several other people and was later suspended from using the service because she identified herself as a lesbian in her profile. Other gamers supposedly found this offensive. Words such as “gay” and “Jew” will also get your banned.
Microsoft takes harrasment very seriously as demonstrated by this action. It is difficult to maintain policy in favor of different people, but for I recommend not using any sort of offensive word or anything that relates to sexual orientation.