It's not the cable winding, at least not so much. I have a theory on why this is happening.
I've noticed quite a few owners of MagSafe hardware that literally STRETCH the cable to its very limits when they are using it in locations where a power outlet is just out of reach. Many times the cable is stretched at an angle from the connector, and so the power cable is pulled hard and bends right where it meets up with the magsafe connector. I suspect that with repeated stretching and bending like this, the wires fray at the joint, ultimately causing the short circuit and resulting meltdown.
Whether or not you call that "customer abuse" is something I'll leave open for discussion. But I think part of the problem is that Apple chose not to mold sufficient insulation support at that point where the power cable plugs into this solid plastic connector. If you look at most other power connectors (including the previous "power ring" version of iBook AC adapters), you see rubber or plastic ridges or rings molded from where the cable terminates into a connector. This is to prevent fraying, and it often works. This is absent on MagSafe connectors, and I think we're seeing why this was probably a bad idea. They did try to add a little extra rubber at the end, but clearly, that's not enough, and just extends the point where the wires fray and meltdown.
I can only suggest that people avoid excessivly stretching their connector cables beyond their limits, and avoid hard bends at the connection points. When I hook up my MacBook Pro to power, I try to make sure the magsafe connector has plenty of slack and is't twisted or forced to bend. HOPEFULLY this means my Mac won't burn up some day.
