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Family Friendly:

I have two young daughters (3 &4), and both love the 360. Viva is at the top of the list (tied with Lego Star Wars), but another great source for family friendly titles is XBLA. Marble Blast Ultra, 3-D mini-golf, Boom-Boom Rocket, etc. are all great games and very affordable. Be sure to get hooked up to live and check it out.

I think the biggest thing that will attract main-stream family developers is time as the 360 becomes the console that moves the most Software. Recent numbers on this site are showing that the 360 is moving in that direction. Take a look at the recent batch of family movie game tie ins. Just about all of them have a 360 version (Cars, Shriek III, Meet the Robinsons, etc.) I know these aren't high quality gaming experiences, but at least the 360 seems to have escaped the "gaming machine for adults".

If you still want more family friendly titles don't forget to check the original X-box library. Quite a few will run on the 360 and are also very cheap:

http://www.xbox.com/en-US/games/backwardcompatibilitygameslist.htm

Despite all of the above, I do agree that the 360 will never touch Nintendo in this area, which is why many of my friends who have kids have gone with the Wii60 solution: Get both.

Funny story about that: I brought my kids to my friends so they could see the Wii and check out the controllers. All the children had a blast with Wii sports for about 30 minutes. My oldest daughter saw the 360 in the den and asked if they had "The Pinata Game". Once that was mentioned, the entire gang moved to the den and played Viva for over an hour.

Perhaps the Wii controller appeals to a slightly older demographic, but my kids are already 360 fangirls.