The 360 graphics capability is amazing. Sure, PC's will eclipse it, but playing my 360 on a 50" HD tele is great. I agree though, FPS games on consols bite compared to a mouse and keyboard on a PC. Ghost Recon looks amazing, but is a pain-in-the-arse to play with a controller.
Now, if you like racing or sports games then the 360 is for you. Project Gothom Racing 3 and Fight Night 3 look so damn realistic. I'm also enjoying Elders Scroll IV: Oblivion on it. The only lockups I've had have been with Oblivion, and only a couple of times.