Micorsoft has a history of pushing shoddy technology on the market and crowding out competitors with unethical and sometimes illegal tactics. Aside from this the game selection was pretty lame for Xbox, many were copies of PS2 games and those that weren't usually sucked, the only total exception to this is HALO. The system also wasn't so reliable, and it looks like the new one isn't doing so well on that front so far. Most of the Xbox games played better on PC(funny since the Xbox is pretty much a PC). What saved Xbox from total failure was the hard drive and Xbox live.
Here's my opinion: I never buy a first generation iteration of any console, regardless of who makes it. The first version have the most bugs and problems, it just isn't worth it. I am waiting for the PS3 for many reasons, one of which is budget. I don't simply go out and buy every console that comes to market like some people. The PS3 is going to be better technology, and I can wait for that. Sony owns the rights to many very cool games that aren't/won't be available on the Xbox. Sony also has a better reputation for building a very tight system, with few bugs. My girlfriend has had her playstation running since the second generation was released with no problems, as have pretty much everyone else I know who owns a PS2. I never bought an Xbox because, well, I have one, my PC. I have delt with Sony customer service regarding the PS2 my mom bought for my brothers previous to launch(I worked for a retailer and got her a deal for 15% off the day before they went on sale), and they were very easy to deal with and it was very painless, also with my camera. I have had friends given the runaround by Microsoft customer service and I don't really want to deal with that.
So the reasons I am waiting for PS3:
Better technology
Better games
Better service
Better experience
Better console