First off, contrary to what whiney fan boys say on this site, the failure rate of 360's is fairly low. Chances that your 360 is going to 'Red ring' are pretty damn low. I have had a 360 since Oct. 2006 that has had no problems whatsoever, as have many of my friends. I do have a friend who's hardware failed, but that failure was out of the box. He currently has a Pro that he has had since late 2006 and an Elite that he bought last year and both are doing just fine. The trick is to give your system proper ventilation. Don't stick it into a confined are where it cannot get propper air flow through the fans. I stand mine upright next to my TV.
As for games, in my personal opinion, the selection of 360 exclusive games is currently much better than that of the the PS3. Think about the future too. Right now, you can get Gears of War, Bioshock, Halo 3, Ninja Gaiden 2, and Mass Effect for the 360. Fable 2 is coming and so is Gears 2. The PS3, on the other hand, has Resistance and Uncharted (The remake of Ninja Gaiden is also good if you like pain). Remember that later this year, the PS3 will be getting Bioshock as well. It will also be getting MGS4 very soon, future Final Fantasy games, and God of War 3.
Finally, consider whether or not you want a Blu-Ray player. If you have an HDTV Blue-Ray looks incredible, but the cost of Blu-Ray movies is limiting right now and probably wont drop much until at least next year once Blu-Ray has a better install base.
I have had my 360 since 2006 and love it. I am getting my PS3 on June 12th when MGS4 is released (Preordered the 80Gb bundle at CircuitCity). If you want a 360, go for the Elite as HD space goes faster than you think. If you want a PS3, get the MGS4 80Gb bundle.
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