So I know they can play DVDs, CDs, Mp3s and pictures.

What about avi or mpeg files from a DVD-R?

I have lots of TV shows in avi format and I refuse to watch them on my PC so I have been burning them to DVD to watch on my DVD player.  Which costs me alot in blank media!!  Does the 360 and PS3 allow me to just watch the files without having to burn and convert them into a DVD-video?

Can they play DVD files like VTS_01.vob ?  Or a DVD ripped to a folder?

What about quicktime files?

Can you rip/move any file directly to the harddrive?

Facts and experiences on both machines would be apprectiated. 

If you use Media Center on 360 the sky is the limit.

PS3 can,,,but you should have windows media player 11 or up on your PC,,Then you can stream most type of movie format /PIC/MUSIC on your PS3,,,beside with every update they add support for more formats,,,as of now I ahve never encountered a video file on my PC that wasn't recognized by the PS3

both have pros and cons. with the ps3, you can store all your media files on the hard drive through usb, cd, and through the network. the 360 won't let you store files locally, unless they are ripped from an audio cd or from the marketplace.

both can stream files fine, but the 360 is more consistent with file types. divx is a bit of a hit and miss on the ps3, some work and some don't. and of course the obvious, music can not be played whilst in-game on the ps3, whilst the 360 does it no problem.

both can play:
divx
wmv
mp4
mpg
mp3
aac and wma

ps3 can also play:
atrac
avc

if you don't mind streaming from your network or playing from a usb device or cd, then 360 is the way to go.

if you want to store everything on the actual console, and don't mind converting a few files, then ps3 is the way to go.

My friend has media centre on his PC which I found very impressive, tempted to have that as part of my ultimate setup.

Good to know that both support a wide variety of file types with relatively few problems.

What about upscaling?

I know they upscale DVDs. What about other files/formats?

ps3 can play mp3 avi mpeg thats all i know.

videos are not upscaled unfortunately, they are just stretched to fit the window. word of warning though, 360 is not a great dvd upscaler, whilst ps3 has been praised for it's upscaling capabilities.

also i don't know if this matters, but it does matter to some people: the 360 is ipod friendly. it works perfectly with ipod, the ps3 is just a bloody mess with ipods.

Yeah I know about the poor 360 upscaling, not a priority for me right now.

Ipod friendly though, thats interesting...  How does the xbox recognise and access it?  Directly or does it go throgh  windows.

If its direct what functionality, features and controls do you have with it?

My dream for this 2 consoles is to be able to play MKV movies. Same with psp.

If I were you, I would go with the 360. It sounds like for your needs, the 360 will be a better fit. Media Center is far better then what the PS3 has to offer.

I have both, and I think the PS3 shows a slightly better image if the source is high, but it sounds like your source material probably is not at a quality where you will notice a difference.

Oh, and if you are looking to buy one of them, I would not base it on this. If movies is what you want one of these devices for, and don't have a BD player, the PS3 is the obvious choice.

In the end, both will allow you to watch all your content without burning to media, the 360 will just do it will less effort. The PS3 however is the only one that will play New HD releases. (The 360 has downloads, but again, there is a quality issue).

Good luck in whatever you decide. You will be happy with either one :). Oh, and they play games too!