Pretty much it goes down like this.
1.I never spend that much on building a gaming computer.I hit ebay alot,and get parts at great prices.The last gaming computer I built costed maybe 400 bucks to build.It had a gig of ram,a Athlon 64 2800+,a Shuttle motherboard,Radeon 9700 Pro,Sound Blaster Live,2 hard drives,on ebeing 60 gig,the other 80 gig in a hot swap tray,and the cd-burner and dvd drive and case and fans.Also a 550 watt power supply.
You either have a choice,go wild and do all retail parts,or go oem on stuff like the cpu,which will save alot and still get you ayear warrenty.I dont build the badest ones around,but I build what is needed to run games for at least the next 2 years without a major overhaul.
2. Pc gaming is way way better on FPS and driving games also.If you choose your hardware right,you can run everything in very nice resolution,with FSAA,and maxed details,and a home system just cant compete with this on these types of games.
3. Key board and mouse.Playing a FPS on anything but these sucks ass.
4.As said above,online multiplayer gaming is not near as good as on pc.I clock in alot of hours on Wolfenstien,and you just cant get those kinda matches done on X Box anything.The ram is not there yet on home systems to let you have a 40 person match.
5.Audio.Depending on what audio card you use,EAX audio stomps a home gaming systems audio pretty easy.Great audio cards can be had for 30-60 bucks.
6.S-Video output on graphics cards.Playing everything you want to on a pc on TV kicks ass.Emulation,movies,pc gaming.Doing a multi-monitor setup also opens a world of uses a game system cant give you.
7.Everything you can do on a pc you can do only a fraction of even on the new X-Box 360.
8.If you only play home systems,thats fine,but gaming computers will always be ahead in graphics,audio,storage,use,and speed,and building a gaming computer lets you be very flexable.
9.Computers have had multi core cpus for afew months now,and 64-bit cpus even longer.Also Dual processor has been around and popular since Pentium 2 was the top end of gaming with a Voodoo 2 dual card set up.And as it is,dual core cpus are really more usefull in making sure there are not data errors,they are not going to offer blazingly faster frames per second.The GPU will need to be the workhorse in this area.And the x-box gpu spec wise isnt anything more special then the newest Radeon or Geforce SLI top end setup,so your not getting the bargin system you think you are.When the X-Box came out,it got stuck with a Pentium 3 733mhz,and a Geforce 3 and a half.It didnt even qualify as a GF 4 Ti4200,and be honest with yourself,if you even now try to match a X-Box game of Doom 3 or Serious Sam,it wont compete graphically with a normal stock Geforce 3 in a Athlon 2500+ with a 40 gig ata 100 hd and 768 megs of ram.DDR ram has come down in price,as has normal Athlon Xps,and a Geforce 3 can be had for as little as 20 bucks after shipping.If your smart and money minded,you can build a gaming computer of those specs and get better FPS gaming then a X-Box will give you.
10.Alot of the great X-Box titles are pc ports.That means your getting a port,not a exact duplicate of the original intended experience.Thi sha sbeen going on for years now,and will probably never change.MDK set the tone for this,back in the 3DFX Voodoo days,so if you want,blame Shiney and 3DFX.