A significant percentage of PS2s suffered disk read errors. That didn't stop the PS2 from being the most successful console of the last gen machines.

This stuff happens. The 360 has the best game library of the next gen consoles by far. They've announced their first round of price cuts, and they're also phasing in 65nm chipsets that run cooler and thus make the machine less likely to RROD. The PS3 is overpriced, the Wii is underpowered and both are lacking in worthwhile games. All else being equal, yeah, I'd go with the cheaper console that has lower failure rates, but the 360 has so much to offer over the competition that it's worth it, especially with a free 3 year warranty.