i have a 360. its pretty cool but the games i play nymph you dont want the little guy playin. xbox live is pretty smooth. a good mate of mine in australia and me play cod4 regularly ( and i get rinsed even more regularly ) which i like plus a few of the guys at work have 360s so we play alot of coop shooters for fun.
ps3 is an awesome piece of kit (a friend has one and it is sick) and my opinion is really that you get what you pay for.
as for the red ring of death it was a reported fault that shipped a while ago with the console which has "allegedly" been fixed. i have mine now for about 2-3 months and its fine so far so good. my mate had his go die on him from overheating. he sent it away due to warranty and it was returned inside 2 weeks (over xmas to boot) with half of the insides brand new and a free month of xbox live to cover it. i think that aint bad personally.
of course some people will hate the fact its microsoft and hate on it for that reason the same way its popular to bash EA. cut through the shit and you will make a decision.
(if you get a ps3 i cant play with you tho )