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Why it's losing appeal. Paying extra $50 for gold membership(other consoles don't have to pay anything like that) HD Player died, the word on RROD is spread and high failure rate than any other console. You have to pay $100 to get wireless internet(its free on other consoles). PS3 already comes with a wireless/wired controller and the D-pad is actually a D-pad instead of a flat joystick(good luck playing classic games).
I don't see a big deal in 360's exclusives, all I can think of is Halo and Gears... Banjo Kazooie Nuts and Bolts?. If you get the Arcade Edition you still have to buy a harddrive. Paying for downloadable content when 98% of the games on PC have it for free.

I still play my 360 A LOT no doubt, but i will never recommend it to someone ever. Unless they're big fans of Halo or something.