I've been asked a lot about this, so I made an example.
There's a simple way to do it, and also the method that's used in MegaCity which is a bit more complex and allows up to 4 players to 'enter the game'.
You can also use the MegaCity method for multiplayer games, although you'll have to add your own code to sort out who's controlling what.
Haven't actually tested these but they should work.
Xbox Player Setup Example
It's also attached.
Edit: Ignore all those extra global values, I was going to extend it to do a multiplayer version but it would of taken me aggges :P another time maybe.