The devs over at xda have been hard at work on getting CyanogenMod 7 (which includes Android 2.3.3) working on the Xperia X8. It has moved on from an alpha release earlier in the month to an RC2 (Release Candidate) release.
The latest v005 custom Rom includes a Wi-Fi fix that was missing on previous ROMs, but camera issues remain (limited to VGA). Also the light and proximity sensors are not working right now. If you want to try this for yourself, check out the xda thread here.