I owned a PS1 and I still have a PS2. I decided to switch camps for this generation of consoles and move to the Xbox 360.
I have no doubt that I made the right decision.
I tried out a PS3 demo unit at a GameStop. The controller is almost exactly like the PS2 version, which is not a bad thing. I like that the controller is now wireless and the shoulder buttons are analog triggers (like the 360's). I couldn't try out the tilt feature because the games I played did not support it. The PS3 no longer has support for "rumble", which is disappointing.
The games looked like Xbox 360 games, which is underwhelming considering the price difference, extra year of development time, and bold claims by Sony. Here's a website that compared games that are released on both the 360 and PS3...they look almost identical!
Both the PS3 and the 360 get much of their processing power from multiple chips processing in parallel. The PS3 can process 8 threads at a time compared to the Xbox 360's 6. A *big* difference is the PS3 is asymmetric, which means the processors have different abilities and the software developer must take care in deciding which processors runs which thread. This is not an issue for the 360, because each processor has identical properties. Writing multi-threaded software is *really* hard. With the PS3, you also have to manage which processor is doing what and try to make sure the best processor for the job is always finished doing its previous work to avoid bottlenecks. The home user will not notice this issue, but software developers will.
I've also read that the PS3's Cell processor is crippled because of a design defect. If true, it could be another headache for software developers.
But forget the processors...they are not as important as the media would have you believe. For 3D video games, the biggest bottleneck is the graphics card. A game can only run as fast as its slowest component, and that will usually be the graphics card. PS3 has a custom Nvidia card and the 360 has a custom ATI card. These cards are very close in terms of specs and performance. I believe this is the most important reason why you will not see much difference between what a PS3 can do and what a 360 can do.
I see the hardware as essentially equal between the PS3 and the 360...which is bad news for Sony. Sony is a hardware company, Microsoft is a software company. If the hardware is equal, then this battle is going to play to Microsoft's favor. Examples of 360 software that make the platform shine are achievements (like the coins you collect in Mario, but available across all games), Xbox Live (networked gaming; game, video, music downloads), Xbox Live Arcade (retro/casual games), plus tools and libraries to make software developers happy.
I've heard the magic number is 10 million: first console to reach 10 million sales becomes the dominate platform for that generation. The 360 is expected to reach 10 million before the end of the year.