The holiday season is always an exciting time for gamers. This is the time of year when the best games are lining store shelves in mass quantities, the console manufacturers are putting together the best hardware deals of the year, and all the guns are ablaze in the glorious console war. This year in particular is special, though, as both the PlayStation 3 and Wii are two years old this month, and the Xbox 360 is about to undergo a substantial refresh.

All three of the consoles have changed quite a bit since their respective launches. More functionality is crammed into each one of these boxes than ever before—and at lower prices, to boot. So what exactly are you getting beyond the bullet points on the back of the box? Let's take a look at where the three consoles stand feature-wise this holiday.

Microsoft Xbox 360

As the oldest console in the line-up, the Xbox 360 has had the most time to mature and it shows. As far as sheer functionality and modern conveniences go, the Xbox 360 is hard to beat, especially when you're connecting your system to the Internet. When the Xbox is made "Live," it becomes a treasure trove of downloadable content, online multiplayer, and multimedia functionality. And the "New Xbox Experience," which is coming tomorrow, only strengths that.

The NXE is really the headlining feature of the Xbox 360 this year. This new interface adds much more than just a coat of gloss to the aging Blades interface that has been around since the console launched in 2005. Microsoft has worked hard to make the interface simultaneously more attractive and easier to use, and the company's hard work has paid off: the NXE is a big leap over the old interface, allowing users to install games to the hard drive, create parties of up to eight players with dedicated voice chat across all games, and more.

Other neat features of the interface include an improved game collection, which makes traversing through a thick library of Arcade titles a breeze; the new Avatars system, which allows users to create Mii- cartoon-like characters to represent themselves online; and the new Community Games initiative, which supplements the Xbox Live Arcade platform with games created by indie developers and moderated by the community rather than Microsoft itself. Expect to see tons of original games flooding the service soon.

But gaming isn't the only area where the Xbox 360 excels. It's also an excellent media playback device, as well. While the HD DVD add-on may have been a bust, the Xbox 360 is a very capable media center, with full support for Windows Media Center, as well as support for just straight old network sharing of audio, video, and picture files. The Xbox 360 can quickly and easily stream DivX movies from your computer, provided the videos are encoded properly, or play MP3s from your portable media player. And, with the NXE, American users now enjoy the full roster of NetFlix content (in HD, no less) in addition to a huge array of purchasable and rentable content from the hearty Xbox Live Video Marketplace.

Feature-wise, the Xbox 360 is stacked. That makes it incredibly hard to believe that it is also now the cheapest console. At a $200 price point with a $20 hard drive from Microsoft directly, the Xbox 360 is the most well-rounded and well-priced console on the market.

Sony PlayStation 3

Though the Xbox 360 would seem to be the prime candidate for "most improved console," Sony's PlayStation 3 handily steals that title—albeit thanks in large part to a rough launch. Some might say that the system launched too early, but the fact of the matter is that today, on the cusp of the holiday shopping season, the PS3 is a force to be reckoned with. Just about everything you could want from your console, and more, is ready and waiting in a newly-purchased PS3.

While the PS3's online support isn't up to par with the Xbox 360, the system has greatly advanced over the last year. The long-awaited in-game Cross Media Bar support arrived this year; this feature lets you access your friend's list and adjust all kinds of settings while you're in a game, which makes it much easier to organize games with your friends. The new official Bluetooth headset has also arrived alongside a VOIP-quality voice chat firmware upgrade, which makes chatting on the PS3 a pleasure.

The PS3 also offers some nice online applications. The Folding@Home client was updated this year to become Life With PlayStation, which offers news from around the world, weather updates, and a stunning HD overlay of the Earth, which begs to be left on your TV as a screensaver of sorts. And a simple internet browser, which recently was updated with Flash 9, rounds out the package.

Like the Xbox 360, the PS3 is also a very accomplished media center. Because of the roomy hard drive (and the ability to easily swap out the preexisting one with any laptop-sized SATA disk), putting content on your unit or streaming it across your network is a must-do. The PS3 supports DivX and Xvid as well as WMA and a host of audio and picture files with DLNA server support, so most of your video files should work fine. There's also a growing PlayStation Video Store for American users which features a ton of great content already (though the DRM in place definitely needs some work).

One of the best features about the PS3 that few rarely discuss, and that has gotten better over the years, is the system's ability to utilize virtually any third-party USB peripheral. Any old Bluetooth or USB keyboard, headset, or what have you will likely work with the PS3, and the firmware updates have quietly made it easier to identify what accessories are plugged in and keep profiles of your devices for later use.

And, of course, you can't talk about the PlayStation 3 without mentioning Blu-Ray. The PS3 stands as one of the best Blu-ray players on the market, thanks in large part to the online connectivity. Sony continues to upgrade Blu-ray playback with support for further Blu-ray features, including the recent addition of BD-Live functionality.

As far as high-class, all-in-one entertainment systems go, the PlayStation 3 is at the top of the list. This is the Rolls Royce of video game consoles: it's the most expensive, but it's also the most luxurious ride if you can afford it. And with PlayStation Home on the horizon and a continued front of SDK improvements, Sony's sleek system is aging like great wine.

Nintendo Wii

Though the system hasn't changed as drastically as its peers, Nintendo's Wii has still come quite some way since its launch. As the family-friendly system, there are some options that are painfully missing to this day—such as media playback capabilities—but there are a few surprises lying in store for those who otherwise just wanted to play Mario Kart.

Online multiplayer really kicked into gear on the Wii this year, as Nintendo moved forward with online play in its big first-party titles and was matched by some third-party developers as well. Games like Madden 2009 and Medal of Honor: Heroes 2 have seamless systems which negate the clunky Friend codes used to connect to others all together, while Nintendo's titles like Mario Kart Wii and Super Smash Brothers Brawl have made it much easier to get into games with random people without codes.

Voice chat has also come to the Wii, courtesy of Wii Speak and Animal Crossing Wii. A voucher bundled with the area microphone allows users to engage in voice chat with those on their friends list, while Animal Crossing itself features in-game voice chat when you invite others to your town.

Another area that the Wii really shines in is downloadable games. In addition to the growing library of Virtual Consoles pooled from tons of classic systems, Nintendo this year pushed out the WiiWare platform, which gives smaller developers the chance to release new games digitally. The service is already host to some amazing games, and it continues to be updated each week with great content.

And for those who want a little more out of their consoles, the Wii isn't as bad as some make it seem. The Opera Browser has improved over the year, offering better performance and a more stable online experience. And the News and Weather channels, which offer real-time updates from around the world, were supplemented with the Nintendo channel, which keeps users apprised of all the Nintendo-related happenings.

While it may be short on some of the features of the advanced high-definition consoles, the Wii is still very much a blossoming system that shows more and more with each passing day that Nintendo is finally embracing the internet and the concept that a console can be for more than just games—even if it's the strong first-party games and the local multiplayer options that really make the Wii worth owning.

Summing it up

So which SKUs should you buy and how much will they cost you? That's information that will have to wait until our Holiday Buyer's Guide arrives. For now, though, suffice to say that each of the consoles offers some great gaming at suiting prices. No matter which console you pick this season, you're in for a treat. The Xbox 360 continues to mature with a new interface and a robust video content offering, the PS3 is finally coming into its own with peripheral support and sheer functionality, and the Wii is gaining ground with a great downloadable content platform and accessible implementations of familiar features like voice chat. This is a great time to be a gamer, and it's only getting better.