x360, by a longshot.
Games are cheaper to buy second hand, titles are better, Kinect is a blast for the kids, I could go on forever.
PS3 is also an awesome platform, but for the kids it's a no-brainer. I think ps3 is a teenager or young adult platform more than for kids. Kids don't care about bluray. You can add a bluray drive to the xbox if you want, but you never will. It does a great job with the kid's dvd's, you'll be set.
The only thing I'd sweat at this point is that there hasn't been a major rev of the platform for a long time now. I'd think it's gonna upgrade soon.
Lastly, pick up an adult-used system from one of the guys here or somewhere you trust. Check Craigslist if you have to. You'll save a FORTUNE.
