Pretty stupid move on their part. I have both systems, and when someone asks me which one to get I tell them the 360 has more games and better online, but that the PS3 has the complete package of HD movies, games, and media center. The people asking me aren't hardcore gamers. They don't care about GTA DLC, and they don't care about one particular exclusive game or franchise. Guess which system they end up going with to feed their shiny new HD TV.
Microsoft's stubborn refusal to accept that their pet format lost is costing them sales. Period.