The problem with the red ring of death is extremely minimal in the elite. What M$ said was happening was there was a chip in the original xbox 360' that failed but they resolved that problem. Ive gone through 2 premium xbox 360' so i decided to get an elite and havent had any problem since.
Though now ps3 is probably the best way to go now that M$ and Toshiba have backed out of HD DVD and Blu ray has won but besides that ps3 doesnt have much else.
Online gaming for instance is much better on the 360 than the ps3, even though you do have to pay for it on the 360, you get plenty for your moneys worth. My friend bought a ps3 and has been regreting it ever since he had a go on a 360.
But the only way to truely decide is not by going by other peoples opinions which could be biased (like mine prob is) but to play the consoles for yourself whether at a mates house or whatever but they both have ups and downs and it all depends what you want from a console.
As a console point of view the 360 has better exclusive games at the moment like bioshock which is the highest rated game of all time, halo 3, gears of war, etc.
But from a media device aswell, 360 is still brilliant as a media device but ps3 out does it with the blu ray player.
Hope this helps