My preferred gaming system is the PC.
Great for entertainment, but also for educational activities and learning to use computers and the net.
Wide choice of games available. Those who can afford them buy them, the others find erm... other solutions.
The biggest downside may be that most PC games require 1 PC per player, whereas console games often let several people play together on a single console.
PS3, Xbox and Wii are all great systems, but which one to buy? Maybe the best is the system that their friends have. That way they can play what their friends play, and borrow games from eachother. (unless the game developers have found ways to tie a copy of a game to a specific console) The price of games being what it is, that could save you a lot of money.
Make sure to talk to the kids. The worst console is the one you got but didn't want.