Xbox Live seems pretty good. But, to me, it doesn't justify the cost. If I want to play online, I want to simply have a vehicle to play friends or find strangers to play. That's it. I don't really care about all of the other stuff that Live offers. This is why PSN currently appeals to me more. I think that there should be a version of Live that offers online play for free. Then, offer a Platinum version of Live that has all that extra junk (useless to me but obviously wanted by others) for a price. Essentially, I don't want to pay for something on a console that I can get on a computer for free. That's why I prefer Sony and Nintendo's free model as opposed to Microsoft's "wringing people's neck for money" online model. Downloadable game content is a whole different topic which I'm not going to rant about right now....
$50 is hardly a mammoth amount, and it provides a great service, which regardless of whether you prefer it to be free or not, is a lot better than both PSN and Wii model.
You are given choices to which kind of environment you wish to game in. If you want to b*tch talk, and be ultra competative - you can do so in the underground section. If you want a more friendly atmosphere, you can choose the family section (which is what I have) and it does work.
You are given responsibility in the form of your REP system, which helps to promote good behaviour. It works to some extent, but could be improved.
Your entire dash is part of live, messaging in game can be helpful. Going to "private chat" via the dash in game is a great sneaky feature and can help your side to victory, especially if you have died but want to pass on help to a comrade who is still playing.
Being able to play a game, see that my friend has just come online, and then send them a request to come and play a game with me. No messing around, they accept the request and jump straight into your lobby. A simple but very practical thing like that is still not feasible on PSN or Wii yet.
Voice chat that works in all games, something which is still screwed up in a lot of PSN games, including the latest UT3. Wii doesn't even have it yet does it ?
Basically LIVE makes gaming online work. There is no messing about. It works intuitively and exactly as it should.
Having all three consoles, I can safely say regardless of the extra cost, LIVE is still the superior online component of all the three.