Sony is notorious for having issues with it's consoles but equally famous for doing nothing about it. However, at this point in time, it's probably been long enough that getting a PS3 would be fine. And if you have an HD TV + interest in blu-ray, buying a PS3 is probably a decent investment. An interest in MGS also helps... I REALLY want to play MGS4, I just don't want to shell out the cash for a console which I will only use once.
Xbox 360 Red Lights
My roommate has had his Xbox since launch and he said hes never had a problem with the three red lights. But I guess it really must be where you keep the power brick. I try to keep mine in a fairly open area not stuffed behind the TV but under the table the TV is on.
The power brick is one cause of failure. But there is also poor thermal design in earlier systems as well as poor part quality in general. They have gotten better though. My first 360 would get pretty warm on the top. My second doesn't. I imagine if I got a newer one with the 65nm cpu core it would be even better. The real saver will be when the 65nm gpu comes out.