Sony PlayStation 3 (60GB)

 

The good: Swanky design with quiet operation; all games in high-definition; PSP-like user-friendly interface; plays high-def Blu-ray movies in addition to upscaling standard DVDs; built-in Wi-Fi and flash media reader; 60GB hard drive; online play is free; HDMI output with 1080p support; no external power supply; free online gaming service; plays PS2 and PS1 games; backwards compatibility is hardware based.
The bad: Compelling exclusive games are still few and far between; PlayStation Home and rumble controller not available until 2008;

a USB port on the back would've been nice; no infrared port means non-Bluetooth universal remotes aren't compatible; glossy black finish is a fingerprint magnet; online gaming, media, and commerce options not nearly as developed as Xbox Live.
The bottom line: The high-end Sony PlayStation 3's larger hard drive and ability to play PS2 games makes it a worthwhile alternative to the cheaper model--so long as you're willing to wait several months for the more promising exclusive titles to hit store shelves. If backward compatibility is your top priority, this hard-to-find model may be worth the search.