I'm sorry to hear your 360 crapped out on you. I'd send it in for repairs and once you get it back, sell it, since I'm sure the best titles will eventually be on the PC as well (if you don't mind the wait). As for what to do with the money, you could get a PSP if you're a techno-centric person who wants a portable gaming unit/media viewer/music player. Later this year they'll be rolling out that BD-Copy functionality to transfer standard definition movies from a blu-ray in your PS3 to PSP. All I can say is do what you feel is best, but I wouldn't buy a new 360 expecting it to be failure proof. If you want to keep the 360, just get the repairs and get the most out of it that you can before having to sell it.
All you touch and all you see is all your life will ever be.
