Xbox has more and better games out right now, the PS3 has a better graphics card. Hope that helps
360 has a better GPU, but overall system performance leans towards the PS3. Xbox LIVE is an excellent service, even if it costs money ($40 bucks a year), but then again if your cheap, you can always make free gold LIVE accounts but they expire after a month, so they are good short-term.
As for hardware issues, my 360 has run flawlessly for over a year now, maybe I'm one of the lucky ones but no problems here. The first time I turned it on I played it almost 6 hours straight on Oblivion, and that is where most of the overheating issues take place.
Also, the reason for PS3 having better visuals in Oblivion is because Bethesda had more time to polish the game (it came much later than the 360 version).
To me the PS3 is not worth it, but that is because I don't like racing and fighting games that much. I also don't like the type of RPG games that are coming to the PS3. Resistance was okay but it isn't that good. I also don't care much for BluRay.
I had the money to buy a PS3 but I decided to get a computer upgrade instead, because I love PC gaming.
Also a lot of the big games coming out are going to be cross-platform, Resident Evil 5 anyone, that game is going to be sick and it's coming out for both 360 and PS3.