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The Xbox 360 was prime example of this

I believe this too, as I remember the many problems that were reported when the unit first arrived. I actually won mine, (cost to me: $0) in a contest at work last September and I've had no problems with it at all.

People buy gaming consoles because they do not want to deal with the hassles of tweaking a gaming computer to work with a particular game.

Now that I disagree with. I also own an Alienware Area 51 computer wich I'm about to upgrade with more memory and a new video card, (Nvidia 800 series) and computer games are the overall best in my opinion.However some good games, (Halo 2, Black, Gears of War, and Halo 3) won't be offered on the PC until a long time to come.

Lately I've been bouncing back and forth between Gears of War Xbox and Fear Extraction Point PC.

Now that I disagree with. I also own an Alienware Area 51 computer wich I'm about to upgrade with more memory and a new video card, (Nvidia 800 series) and computer games are the overall best in my opinion.

I agree that computers are a better gaming platform than consoles (I do not own a console). As for upgrading, the main problem with that is that unless you do it very often, that new video card you might want to get may not work with your motherboard (e.g., AGP vs. PCIX), so you end up getting a new motherboard, which may require a new CPU and memory... I am sure you are familiar with this very expensive "vicious cycle."

Most console buyers do not want to deal with that. They just want to put the game in the machine and play it. Once you introduce the upgrading paradigm to the console world, you will end up with 2 possible outcomes:

Gaming companies would be afraid to write games for the high end version of the console because no one wants to spend the money to buy the upgrades, or...
Gaming companies write games for the high end version of the console but then shut out the people who bought the low end version of the console.

Either scenario sounds like it will be a bad outcome. A competing console maker could focus on one version of their console and then capitalize on the fact that it will play all of the games for that platform.