"But with the Xbox 360 console practically on top of the world right now..."
In which world?
Or does practically means ignoring Wii and PS3, weekly sales, annual sales and life time sales?
I'm ignoring Wii for sure, but PS3 is pretty much right with Xbox right now. I can't judge which one is better because it would be a bias opinion. But honestly, there is no better. Both have its strenghts and weaknesses which put them on the same playing level. People judge which is better based on their preferences of the strenghts and weaknesses, so no one can state which one is better as a fact.
You gave yourself the answer already. It's not about personal preferences, it's about sales, profit etc.
With XB360 still fighting to safe the 2nd place out of the big 3, an handheld would be too risky for M$, that's it.