price and failure rates and disc scratching are the problem but it better improve so people can feel comfortable buying a 360

No question on this one. People tend to think of Sony as "the big bad guy" because 1) they are a very large corporation and 2) because they have been leading the industry for a long time -- but they are nothing like Microsoft. Microsoft will devour this industry whole if they ever get in to a position like Sony had the last couple of generational cycles. 

@ Legend11

Some good points, I broke a XBox 360 and we will be selling the (repaired) device soon. I would like to add:

4) Too noisy, the DVD drive makes too much noise when my girlfriend falls asleep after watching a movie. She doesn't notice the noise generated by the PS3.

5) Too many components (huge tranformator), especially if upgraded with external components like a HD-DVD drive.

6) The controller is too bulky for my girlfriend.

7) Lacking backwards compatibility (compared to Wii and PS3), especially European and Japanese titles.

8) Technical reasons, lacks motion senseing, lacking card readers, less bang for your buck as IMO the PS3 is significantly more future proof both in terms of power and functionality.

9) Most new XBox 360 games will be ported to the PS3 anyway. I think Oblivion is the XBox 360's best game and it has been ported to the PS3 (luckily a quality port), IMO Gears and the Halo series are seriously overhyped games. I regretted spending 60 Euro on Gears of War (especially my girlfriend hates this game), I enjoyed games like Kameo and Tomb Raider Legend for the system much more.

10) Playing games online costs money annually.

Just some primary reasons for me, sure there are more reasons, for example like disc scratching (some units are prone to scratch discs), Blu-Ray discs are almost impossible to scratch and the PS3's drive is more scratch tolerant when buying second hand PSX, PS2 and DVD discs.

@MikeB

I agree with the most of you post above, number 4 and 5 is I think not a big issue but the rest I think I can understand. I just have one question, becuase I belive that you have a PS3. At point number 7 you are stating lacking backwards compatibility, didn't sony remove the hardware compatibility from the EU version? That is something that makes me pissed of (even if the software emulation mayby is fixed now) we pay more and get less, not something I like. So my question is, are the software emulation PS3 has so much better than xbox360s?

I'm personally very interested in the Xbox 360 and definitely getting one eventually, but there are a number of factors that are holding me back.

-It costs too much. I'm literally under the poverty line and have so far been buying used games for my used Gamecube and Xbox. I'm seriously worried about what I'll eat after the 4 major first party Nintendo games come out this year (SPM isn't out here yet). =P

-I hear the early models have loads of problems like being obnoxiously loud and bricking all too often. I understand they are working on adding quieter DVD-drives and the 65nm chips, and will definitely wait for the fixed version.

-I don't have a HDTV, and getting a HD-enabled console without one feels dumb. I'd be paying good money for a feature I'd have no access to, and some games are just unplayable in SD. For example the text in Dead Rising won't show up, and Gears of War was too dark to play when we tried it on a friend's SDTV, although the latter might just be because he had a crap TV or something.

Wanna bet the core will still not sell well at 250$? The Premium will when it hits that... the core is a useless sku that needs a 40 dollar memory card to operate on a minimal level... where is that big price difference between the core and premium? It's only on paper.

I haven't bought one because i get the feeling it breaks by just looking at it. Two of my friends have 360, one had to repair his console 3 times and the other 5 times. Eventually they said enough and exchanged them for Wii

 They could have at least traded 'em in for PS3s to get to play some of those 360 games, like none of 'em are gonna be on Wii...

to Libellule :

If you compare unique titles from the sony retrocompatibility list with the total ps2 and ps1 games edited, the compatibility is 40%.

Strangely, its about the same for the xbox 360 but people tends to think ps3 is a lot more backwards compatible than the 360.  Of course its totally true in USA and Japan but not at all in Europe.

Bye.