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Xbox Live bothers me because I can do similar things for free on the PC through services such as the ever growing and improving Steam, but then I should have really said Games for Windows Live instead of Xbox Live

This, along with the PSN being free and improving despite being free are two factors that put me against Xbox Live. Xbox Live may offer nice features, but I don't try and hang out with and play with/against everybody I meet and I also haven't been one to really put a great importance on things like clans (biggest drama ever during the years of Counter-Strike). While it's a great convenience to have those features, I can wait for them to be made available for the PS3 while still being free or just play on the PC instead.

Thus, if the PSN can match Xbox Live for free, then I think that Microsoft should make it free. Then again, how much money are they raking in?