I had reliability problems with both Xbox 360 units I had, but none with the PS3. I would recommend you buy a PS3. You might not be interested in blu-ray now - I respect that - but I think having it would give you options in the future that the the 360 wouldn't give you. When blu-ray becomes the norm, which is admittedly a while off, it cannot hurt to have another player for your children to play movies on, especially if you ever want them out of your hair in another part of the house, while you're playing a blu-ray of your own. I think the PS3 is more "future proof".

This is pure personal opinion, and I'm not interested in debating the merits of either system. This is just another opinion for the original poster to weigh in the balance.