Yeah, the fighting could be better, but maybe I'm just not used to the mechanic yet.
What I've found is that you need to use the Grab button (right trigger) and dodge the first punch (X).. then start wailing (A). If you're grabbing on and lose, you don't get KO'd, you just fall over, the fight ends, and you get up.
Fight Night 2004 on the original xbox is pretty awesome, btw.
I haven't tried the new 360 boxing game.. well, i tried the demo and it was horrible, but I'm guessing the finished version is a bit better?