I have both a Xbox 360 and a PS3 and if I'm truthful, at the moment, the 360 is superior to the PS3 due to the large catalogue of games and the killer exclusive titles (Bioshock, Halo 3, GoW etc.) it has, as well as the superb Live online service but I believe in the long term, the PS3 will prove to be the better choice.
At the moment there are very few decent games out for the PS3 (GRAW2, RSV6, Resistance: Fall of Man being some of the notable exceptions), certainly no killer exclusive titles that would persuade you to buy one, however, in the next couple of months and in the run up to Christmas expect to see the number of titles increase (I'm looking forward to Call of Duty 4, Gran Turismo: Prologue and Haze). It won't be till 2008 before I feel the PS3 comes into its own, as it'll get the killer exclusive titles it deserves (Killzone 2, Gran Turismo 5, LocoRoco, Tekken 6, Final Fantasy XIII, MGS4, LittleBigPlanet to name but a few).
Sony's equivalent to Xbox Live, the Playstation Network (PSN) when compared to Live in terms of content (full games, extra game content etc.) is quite frankly lacklustre with the exception of Gran Turismo HD Concept but Sony appear to be slowly trying to change this by updating the PSN store every week with new demos and full games (Warhawk, an online multiplayer was released for £19.99 last week).
Another thing to consider is that the Xbox 360 is first and foremost a games consoles with some media features, whilst the PS3 is a true digital media hub with its wifi and bluetooth capability 'straight out the box', and built in Blu-Ray player. You can also browse the web and even use a USB keyboard and mouse if you so desire (eventually you'll be able to use blutetooth keyboards and mice). Another bonus is that the hard disk is easily upgradeable to whatever size storage you want, as it's a standard 2.5" drive, so you'll never run out of room for videos/songs/downloaded games etc. Sony's plan to release a digital tuner for the PS3 in 2008, will also mean that you'll be able watch/record TV programmes using the console in the future. The fact that Sony have placed an emphasis on the console being a media hub for the home, is why I feel that it's a better choice in the long term, as the console's features mean that its longevity will be greater than the Xbox 360.
I do agree that the price of the PS3 puts off casual gamers, however, if you think about it, it's not much more than a Xbox 360 Premium with the wireless adapter and (noisy) HD-DVD drive.