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1. Its only cheaper if you never plan to play online, and in the case of the arcade console, don't plan on upgrading your hard drive. After 2 years of live the $300 Xbox 360 pro is equal in price to the PS3.

2. Yes live is much better, but as its been stated a million times, its because they can afford to as they charge for Xbox live. If Playstation or Nintendo charged for online gaming then they would have a reason to quickly upgrade their service. For $50 XBL isn't THAT much better than PSN.

3. This is true right now, although PS3 is catching up quickly due to its massive first party.