Actually, you get PSN for $0, not
less than $0
Although, from my experience with both services, Xbox Live is much more reliable with less lag. The Netflix service is basically $9 a month for unlimited HD or SD streaming movies, tv shows, etc., so it is a much better value than the PSN video service.
Also, as far as games, its a matter of opinion, but considering the 360 has many more games (more rpg's and other genre games than PS3), you'd be better off with a 360 in every way. For $260 you get an arcade console, 20GB hard drive and a year of Xbox Live. That's still cheaper than the lowest PS3 model by $140. That's almost 2 more games and an extra controller! Also, the 360 supports 1080p right out of the box with the HD Component cables. The PS3 will require an HDMI cable for HD, which adds on another $20+ if you buy the cable at a retail location.
Games to get on the 360: Gears of War 1/2, Halo 1/2/3, Fable 1/2, Dead Space (multi-plat), Fallout 3 (multi-plat but the PS3 version has major bugs), CoD 4/World at War (multi-plat but more reliable and fun experience on 360), Mass Effect, BioShock (multi-plat), great arcade titles like Braid and Castle Crashers, Half Life 2 Orange Box (mutli-plat), Viva Pinata, Command and Conquer 3 (multi-plat), Overlord (multi-plat), Crackdown, The Darkness, Assassins Creed (multi-plat), Rockband or Guitar Hero (multi-plat), any sports game you could want (multi-plat but usually run better on 360), and many many others coming in the next year.... just to name a few
Does an Xbox 360 upconvert dvds?
Yes, but only to 480p. Still, if you want a good upconverting DVD player, go to Wall-Mart and buy one. The PS3 does upconvert DVD's very well, but not the as well as some stand alone upconverting DVD players.