I think the 360 was a success on multiple levels, no point at all denying it since it's foolish to deny, but its success is helping everyone, including PS3 players.
Think about the cable companies right now. How many people loathe Comcast? If there were more options, maybe they'd improve their quality and try to improve. If the MS or Sony were alone with Nintendo right now, with the Wii's decline in sales (and even its varied consumer targets in its heyday), then they would probably end up something like Comcast. They'd have no reason to actually compete and would just do things as they wanted to do. Consumers would have to suck it up and that would be that. Prices would probably still be high.
I really like the 360 (and all of the things done right have basically been mentioned already), but I honestly see an important part of the machine's legacy as putting a shot across Sony's bow and making them get their game on so they didn't get lazy. They had the PS2 and it was an amazing success, so they needed something to get them rolling again so they didn't just sit back and figure they'd own everyone. Competition breeds a consumer friendly environment and forces innovation. I don't think anyone can argue that it hasn't been an outright positive thing.
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