Thanks Dude!
Like you said, there seems to be more games available for the xbox, hence why I am targeting for the Xbox rather than the PS3, and also I heard there is problem with PS3 with a non HD TV. Is there a similar issue with Xbox as well? or should i just buy a brand new hD tv?
Get yourself a normal Premium console, the £159.99, the hard drive that comes with that is more than big enough. The elite just looks better and comes with a bigger hard drive that you're more than likely never going to use, waste of money.
I've not played a PS3, but i'd like to. The one thing i would say despite not having played the new Playstation, is that the range of games available for the 360 is a bit better at the moment. Check Play.com or eBay, loads of cheap 360 games about.
As Rev said, your 360 should be fine with a normal smaller television. I played mine on a prtable when i first bought it. But i moved it downstairs to the bigger HD TV, only downside is i have to wait until nobody wants to use the TV, before i use my 360, which usually isn't till about 10:30-11:00pm. If you've got the money to buy a new HD TV, go for it, picture and sound quality will be better, if not, wouldn't worry.