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CaptainPrefrences said:
^ sp ps3 does use dedicated servers.

i have to research this, but i heard that xbox live, well gears of war more specifically, connects to other peoples 360's and their connection. sounds gay i dont really beleive it, but is it true?

Most 360 games are P2P.  The only 360 games that use dedicated servers (that I know of) are MMOs like FFXI and EA Sports titles.

With the PSN, it's the opposite.  Most titles use dedicated servers (Warhawk, Resistance, MotorStorm, UT3, etc.) and very few are P2P (CoD4). 

I'm not sure why, and I guess it's just the way XBL is designed.  I assume it's just easier for developers to design the online around the consoles without much of an external system.