Well, the PS3 does a lot more than the 360. if you want what the PS3 does, then it's totally worth it. If you just want to play games, then the 360 might be a better option.
The PS3 is more expensive than the 360, but if you want any single feature that the PS3 has, the total will cost more than the difference between the PS3 and the 360 if you want it (hard disk upgrade, wireless internet, HD-DVD drive, etc.)
If you don't have a HD set, or have one under 40", you might look into getting a Wii. If you have a larger set, the Wii graphics will be pretty disappointing (I know I'm going to get complaints about this one. Yes, I have a Wii. Yes, I have the component cables. I also watch SD channels, but it doesn't mean they don't look pretty lame compared to the HD channels.)
