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DirectX Batching Best Practices
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A Microsoft DirectX best practices article recommends to approach locking like this:

  Performance Optimizations: Using Dynamic Vertex and Index Buffers (MSDN)
  http://msdn2.microsoft.com/en-us/library/bb147263.aspx#Using_Dynamic_Vertex_and_Index_Buffers

Create a larger vertex buffer than required and fill it incrementally. For example, if you
are batching your vertices into 8K chunks, you can create a vertex buffer with space for
32K vertices, fill in the first 8K (D3DLOCK_NOOVERWRITE), call DrawPrimitive(), then fill
in the next 8K (D3DLOCK_NOOVERWRITE again), call DrawPrimitive() and so on.

When you reach the end of the Vertex Buffer, you lock with D3DLOCK_DISCARD and start at
the beginning again.

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Vertex Buffer Renaming
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A Microsoft DirectX driver implementation article reveals some kind of double buffering
technique for vertex buffers and index buffers being implemented in DirectX 8.0 and later.
http://msdn.microsoft.com/en-us/library/ms794499.aspx

A vertex/index buffer can allocate two sections of video memory and when you lock using
D3DLOCK_DISCARD, if the buffer's video memory area is scheduled for a drawing command that's
still hanging in the air (remember DrawPrimitive() just schedules rendering, it doesn't wait
for the graphics card), it can silently switch between them.

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XBox 360 UMA
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Various sources seem to suggest that the XBox can more easily cope with the DrawPrimitiveUP()
methods than with a dynamic vertex/index buffer. This apparently has to do with the UMA which
allows the memory holding the vertices can be directly used for rendering.

The XBox 360 probably doesn't do vertex buffer renaming (since the D3DLOCK_DISCARD flag is
not supported), so it needs to copy all vertices into an internal array if SetData() is used.

Conclusion: Use dynamic vertex buffers on PCs and DrawUserPrimitive() on the XBox 360 if
you're working with dynamic vertices.