@windbane
The only reliable indication of "it's working" is that it's selling. It means that people want it. It may be behind in technical terms, but it really doesn't matter. People tend not to buy technology, they buy something else, whether it be an experience, a tool for a job, something to show off. In all those cases, the technology is not the primary value or driver of sales, but rather what you can do and get from your purchase.
For those who play online now in PC/X360/PS3 and enjoy it, the experience they get is of course good, but for the vast majority of people it is not. Any argument about internet forums such as this one are inappropriate since most message boards have mods to keep things under control. It's been quite well researched that the social inhibitions of being an asshole in real life are drastically lessened in online behaviour, so the density of assholes you encounter in the anonymous net is greater by orders of magnitude.
If a person decided to try online gaming and the first experience is that you're being called by every name in to vocabulary, and some invented ones, that person won't be easily persuaded to try it again. That's the problem with the current systems, and it's not so much a technical problem as it is a social problem. And fixing social problem via technology is not an easy task, to say the least. If you could only chat with your friends, that would be a partial solution, but seeing as consoles are used by many different people, you'd need multiple friend lists and user accounts and that would again complicate things for the general public. I'm not saying it can't be done, but it's not as easy as you'd think when you want to make it work for everybody.
