I don't like consoles for one reason: freedom. On a PC, you can do whatever the f*ck you want to your software and your hardware, and it's not a big deal. For example, take modding, backup copies of CDs, and yeah, Ill admit it, pirating games that you don't feel the need to play multiplayer (trying to crack online services like STEAM takes a bit more skillz than I possess. Plus, I only bother playing a game multiplayer if I like it, in which case I do feel a moral obligation to support the developers). In contrast, on an xbox, for example, you get kicked off of Live if you install a better hard drive.
Add to that the fact that I mostly play RTS, and that no console has yet to produce a playable way of controlling an RTS, and PC gaming is - in my case - the only way to go. Don't get me wrong, I enjoy going over to my friends for some Halo action on the xbox, but I'd never pay for such a thing.
And everyone whining about the frequency of hardware upgrades - how long was it between the release of the XBOX and the XBOX360? In the US, it was ~4 years. In Europe, ~3 years. You can easily make your computer last 3 years if you buy a good computer, upgrade the vid card for $200 after 1.5-2 yrs, maybe add some memory or other random component for another $100, and you are prepared to actually use the LOW graphics settings in cutting edge games by the end of its lifespan, with limited resolutions (right now a low gaming resolution would be 1024 by 768, which as someone else stated is the HIGHEST resolution you can reasonably expect to get out of your xbox360. Quite often, an xbox will actually be played on a standard TV, degrading image quality further).
Someone else mentioned the hassle of breaking open you PC as a negative. Well, it IS undoubtedly a negative for the PC, but the latest gen consoles haven't exactly been easy to deal with either (read RROD on the 360, along with semi-common freezing, locking up, and lag problems under certain games). The need to get your screwdrivers out and get your hands dirty is certainly greater on a PC (if nothing else because your xbox 360 warranty will be void if you do so), but hardware and configuration problems are an inherent feature of the entire computing industry, not just the PC segment of it (although I'm not debating that it takes more know-how to run a PC properly than to run a console properly).
As to pricing. Assuming you keep your system for 3 years spending a frugal $300 ($200 GPU, $100 ram, for example) on upgrades during that time. Let's also assume that a good new computer can be had for $1500 (this depends on how many accessories such as mouse, keyboard, and monitor you have to include). Let's assume that you already have a monitor, but you will want to spend ~$100 for other accessories (this is fair in comparing to a console since you won't be buying a brand new TV just to play your xbox). Together, we have $1900 for a computer that can play all games, albeit at low resolutions and with low quality settings at the end of its lifetime (but as demonstrated with the xbox360, it may actually offer comparable absolute visual quality even to a last-gen console even by the end of its lifetime), for 3 years, maybe a tad more.
Now consider a console. Let's take the xbox360 as an example. Buying our original $1600 computer+accessories above could be considered equal to buying a latest gen console reasonably soon after launch. In the 360s case, this would have cost $400 USD for the Premium (one could argue that the Elite would make a better comparison, but for the sake of discussion, let's assume we chose the Premium). For there to be any point to having your 360, you'd almost have to have at least two controllers. The standard wireless ones go for ~$50 each, so that's another hundred. We can safely assume that some other random trinkets (Wireless adapter to your PC, an extra controller, a headset, a 20 ft Ethernet cable, you name it) will add at least $100 to that over the course of the console's life. Now this is an xbox, so it has no media handling capability and most certianly not a blu-ray drive like the PS2 (we'd have to up the price significantly if that was the comparison we were making). You then have $600 for your console system.
Game prices for the two platforms are similar (although i would argu
e that in your average PC user would end up paying less for their games; in reality pc users typically buy fewer games, partially because they can be *acquired* by other means). For functionality similar to a PC with an internet connection, you'd also have to sign up on x-box live. Let's assume that we don't feel the need to have xbox live the entire 3 years, but only 2 of them. I think this is a fair approximation of what many xbox owners do; they only subscribe to expensive services like this when they're hooked on a game that benefits from it. Gold membership for 2 years costs ~$100. So your xbox ends up at ~$700 (most PC games have a free multiplayer service, but even if they don't I personally have never seen the need to subscribe to anything like that since most games come with a couple of months free, which gives you enough time to get bored).
We have now paid ~$700 for our xbox. Now the computer is massively more expensive, costing $1900. But is it really? I would argue that to satisfy yourself over a period of three years, you would HAVE to spend ~$1000 or so on a PC anyway, even if you only gamed on your console. Why? Modern life simply requires e-mail, the ability to look at your uncles digital camera pictures, the ability to write documents on a PC at home, etc... Now a low end PC can cost less than ~1000, but if you include accessories (excluding screen) you would be hard pressed to find/build a system that will last you 3 years that fits on a budget significatnly less than $1000 unless you LITERALLY do NOTHING but read e-mail and browse the web. Even then, some more interactive webpages may end up straining your 3-year-old-cheap-even-back-then CPU, and I would argue that most people will want to be able to watch the latest movie clip their friend sent them from his/her favorite move, even if it is coded in the latest coolest video codec and your integrated graphics from 3 years ago doesn't have any hardware acceleration for that. A 3 year old system in the $1000 price class could conceivably do that, but not if you go lower.
In conclusion, the dual role of a gaming machine means that the real life costs are:
Gaming computer: ~$1900
Console (xbox360): ~$1700
The console is still a bit cheaper, and I think that's probably the way it works out in real life too, but the difference isn't that great (and remember that this is a VERY rough approximation). Now granted, if you're into PC gaming you're going to be a lot more tempted to buy fancy upgrades for your PC than you would be if you have an xbox for which there are no upgrades (although Microsoft may be changing that, as the release of gradually more powerful 360s seems to imply). But that doesn't change the fact that unless you require your computer to always run the newest games without compromising image quality (although in terms of absolute image quality, little has changed: it's just that as compared to what you COULD be getting, the PC will be giving you less quality. Note that the image quality of your computer would grow slightly as you upgrade it with those $300, the console would stay the same - so in terms of absolute quality, you have a distinct advantage over the console as a PC owner, even though it may not seem that way), you can actually get away with being a PC gamer at only marginally higher cost than that of a console player. Whether you have the willpower to resist that new RAM and proc and OMFG badass video card that just came out is your problem. But what I wanted to demonstrate is that the acual price difference for someone who doesn't require anything more out of their PC than they would out of their xbox (that is, constant ABSOLUTE performance and the ABILITY to play all games, no matter how new) during their lifespan (~3 years), the PC alternative is actually only marginally more expensive.
As shown above, the money issue that many are complaining about is really moot - they're comparing apples to oranges, or put another way, they are getting as much out of their pc as they are out of their xbox, but they're expecting more - while the visual qualities of PC games gradually improve, it stays constant for consoles of the same generation. That being said, plenty modern games still look better at low settings than old games at high settings, so it's not like your PC experience is actually degrading over time, you just think it is because in the back of your mind you know how much better that new resource hog game COULD look with a brand new computer.
Based on my above argument, I would say that whether you prefer console or PC is really a matter of what kind of games you play and how highly you value the various collateral benefits (such as split screen on console and more media and office capability on the PC), rather than an issue of price. An RTS gamer would definitely go PC, for example, while an FPS player might (although not necessarily would) prefer a console.
The whole issue of price is really overstated.
My 5c.
EDIT: Grammar and left out words