Something

foreach (ConnectedUser User in ConnectedUsers)
{
    if (User.TimeOut <= 0)
    {
        ConnectedUsers.Remove(User);
		continue;
    }

    if (User.IP == ip)
    {
        User.Hits++;
        User.TimeOut = DefaultTimeOut;
    }
    else
    {
        ConnectedUser NewUser = new ConnectedUser();

        NewUser.Index = LastUserID;
        NewUser.IP = ip;
        NewUser.GamerTag = DefaultGamerTag;
        NewUser.Hits = 0;
        NewUser.TimeOut = DefaultTimeOut;

        ConnectedUsers.Add(NewUser);

        LastUserID++;
    }
}