I definately agree with all those poins. However, in response to your Oblivion comment, while it does look spectacular on a 400$ cad. xbox360, in order to match the same detail on a computer you need at a minimum a 800$ rig.
As for shelling out the extra cash every 2 years to buy a new system, that is because you are not content with the first system you bought. The original xbox that came out has been in the market for almost 5 years if not longer. And they are still making content for it. The Xbox360 has already been out for 1 year. YOu bought the PS3 because you had to have one not because of any other reason. What I am trying to say here is that while you may have spent the dough to but another PS3, I wouldn't have since I would have already owned an X360, and I tend to stick it out with what I got, and not purchase a ps3 at the issanely high price.
The x360 is an impressive machine. While on a standard TV it may not look as great, it still plays and does look better then anything I have seen on any of my pc's.. (well thats pending, I am getting a 7800 GTX OC today, so time will tell how amazing it is). The x360 will be around for a solid 3-4 years.
If you compare to computer upgrade time, every 2 years you need a major upgrade if you want to stay up to date. This is more then 800$ as all the parts are different in that point in time.. DDR1 to DDR2 for example... or 478 pin to 775.
Of course PC gaming is here to stay. It was just my cynical mind talking. But I thikn you can see what I mean. For those who dont have the cash to afford expensive computers to stay up today for the gaming alone, would deifnatley look into a console for their gaming purposes.
Lets be honest, you do not need more then a 1ghz p3, 5123 mb ram to do your homework, watch videos, burn music/dvds. Infact I had a p3 733 for the last 5 years. I nevert used it for gaming. It ran windows Xp great, played my movies, my music, did all my school work. Now it cost a bit more when it first came out, but now what is worth? 80$?? But I didn't have to upgrade to a faster computer. Infact if it was just games that I wanted the Xbox360 has a lot of titles.. But I can afford to upgrade and have more systems in my hose so I did.. I hope you see the perspective I am talking about here. Computers are needed for work purposes. No doubt about it. Infact every household needs a computer that can at least access the internet and use word. Its a very usefull tool.
As for online gaming, x360 as far as I know costs 70$ a year for gold membership. Which also comes with a 20$ off any game purchase. Sony's systems, say you just upgrades from a ps2 to a ps3, has free online gaming. There are many pc games that require monthly subscriptions as well... WOW? Eve?? those games cost over 100$ a year to play and be subscribed ontop of your internet cost. If people can afford to do that, then I dont see what the big deal with paying less then 5$ permonth for yearly xboxLIVE.
As for pirating games. This is a flaw in the other posters argument. If you realy want, you can hack your x360 and also download and burn games for that system too. Same with the original XBOX with the mod chip. Except that you cant play online. This is no different the PC's though as a hacked game most likely wont play online.... except for maybe the first week of its release until a patch gets rid of it.