It's true that the 360 has been plagued by hardware failures. The majority of these were from th earliest released machines.
If you buy a machine, check the date code on it (can be found on the top under a flap). If it is within the last few months and the console has an HMDI connector, it should be much more reliable than earlier versions.
The biggest problem is the red-ring-of-death, and MS is warrantying all consoles for three years for this particular problem.
If I was buying right now, I'd buy a 360. The game selection is better, there are more games that have been out for a while and can be found discounted, and the online experience is superb.
Just don't get talked into any expensive accessories, and that includes an HDMI cable that's more than $10.
Panasonic TH50PX77, *Choice 530, Samsung 40C650, Sharp LC3742U, *Choice 505, Pioneer VSX-D409, Xbox 360, PS3 x 2