40gb vs 60gb.
The 40gb version has 2 (or, 2 less than the 60gb version) USB contacts. Not a big deal if you ask me. And the 40gb version isn't compatible with PS2 games. Also, the 40gb version has no SD card reader.
Personally, I'd go with the 40gb version, unless you can get a good deal on the 60gb version. If space is an issue, you can always buy a bigger HD online!
When it comes to games, I think the Xbox360 has the edge NOW. But, that will soon change I think! (Just look at upcoming releases) Also, the upcoming Eyetoy for PS3 seems quite amazing. I never tried the eyetoy for PS2 - but I have downloaded several trailers showing the new Eyetoy for PS3, and what it can do. Simply amazing!
YouTube - Eye of Judgement( PS3 ).