Here's the analysis:
Wii is essentially the old Nintendo Game Cube platform, but with the enhanced game play that the unique controllers bring to the table. Very big on the fun factor, but unspectacular graphics and not super powerful for sophisticated "Gen 3" games.
Xbox 360 and PS3 are both truly gen 3 systems - awesome graphics, hard drive, powerful CPUs. They are comparable as far as graphics and performance and features. Xbox has an HD DVD player, PS3 has a BlueRay. It's way too soon to know whose going to win that format war - if anybody. Both have on-line game play. Both provide extra on-line services and promise to provide more (i.e. movie downloads from partners like amazon or netflix). Both are really positioned as home entertainment consoles rather than gaming systems. Many games are released for both platforms, though each has some high profile proprietary games.
Bottom line: Buy an Xbox 360 and, if you want to add another dimension, do the Wii too - they're relatively cheap for what you get.
Why? It's mostly a coin toss between Xbox and PS3 - particularly if your kids don't have their eyes on any particular titles. But, the Xbox 360 has been in the field for a year, the hardware problems have been resolved, it has a solid track record and a loyal following. None of your kids' friends are going to say "Ew, you have an Xbox 360?". (Plus the porn industry has adopted HD-DVD as their format
- gotta be lookin out for daddy).
Sony has had a few missteps with the PS3, it's still mostly unproven in the field, it costs more with no indication that it's worth it - though they are adjusting the price.
The Wii is a blast and will always be good for some shallow gaming, but it's not really going to grow with your kids for 3-5 years and unless all you are ever going to want is family fun gaming - the Wii is much more fun when playing head-to-head games with people - I wouldn't recommend it as the only console for teens (friends will find it "quaint").
