Let me preface this by saying that this is my opinion based on my experiences. This is intended to be a subjective look at what makes one better than the other for me personally, and not as a flame or hate thread. Thank you.

I believe that XBox Live is way better than Playstation Network, and is totally worth the $50/year. I recently acquired a PS3 as a wedding gift from 4 of my awesome friends who chipped in together to get it. Best wedding present ever (considering most of the crap we get is dishes and towels).

My first PSN experience.

So now including me, I've got a group of 5 friends with PS3s so we're totally looking forward to playing some stuff online together. And wouldn't you know it, just a few days after I get my PS3, Warhawk comes out. So we all bought Warhawk, but we have yet to actually play a game together. You may ask "Why?". I'll tell you. I can't get my bluetooth headset to work.

I got the PS3 to recognize the headset just fine. I went to the audio settings, and selected it, and it tested just fine. Everything is A.O.K. then right? Nope. Go into a Warhawk game, and it doesn't work. "Well did you make sure UPnP is enabled", "No, let me check that". Close Warhawk. Go to settings, UPnP is disabled. "Check your router's settings to see if UPnP is enabled." "Ok, just a minute." ...................."No it's not. I just enabled it. Let's try again". Start up Warhawk. Set up game. Load. Headset still doesn't work. "What NAT type is your PS3 using?", "I don't know. Let me check." Close Warhawk, go to settings. "It says NAT type 3". "Shit, you need type 2." "OK, how do I do that?" "Go back to your router..............

And this went on for probably about an hour with my friend trying to walk me through my router settings. We never did figure it out, but I did download a firmware update for my router that hopefully will help when we go at it again tonight.

And now compare this with my first Xbox Live experience (for 360)

A friend and I want to play something online together, so we go out and pick up Perfect Dark Zero. I load up the game. Select ccop. Invite him. He joins. We play. It's great fun. That's it. So simple. So easy.

Conclusion

Yes, PSN is free, but it's also very unorganized. It's really up to each game developer to implement certain features, whereas everything is standard for every Xbox 360 game. And having trouble with a headset doesn't sound like a huge deal, but when you end up spending your evening messing with router settings rather than sitting on the couch blowing shit up, it really gets aggravating.

Now granted, Microsoft has more experience in the online-gaming area than Sony, so it should probably be expected that they are a step behind in the quality of service. But I do hope Sony or PS3 game developers work a little extra to smooth out the online experience.

Update

Finally got the headset working on my PS3. Evidently the firmware update for my router fixed the whole NAT type issue. Played several rounds of warhawk. Pretty cool game.