I picked up a used Xbox and 2 wireless controlers for like $100 bucks last month and I friggin love it. I picked up Halo and Fable at Best Buy, and hit up Gamestop for a bunch of random cheap games.
In the past 5 years I've had the PS2, Gamecube, and PSP, but never got an Xbox or moved up to next gen. I planned on just upgrading my PC until I discovered I would actually have to buy a new rig to move on to next gen PC gaming, so I decided I'd try new consoles. I was orginally going to get a Wii, but since it was NEVER in stock anywhere I just kept on waiting. Finally they got 5 in stock at my local Gamecrazy that no one knew about so I went to pick one up. While I was there I saw the Xbox for like $70 and $15 wireless controllers on the wall and just decided to screw the Wii and pick up an Xbox.
I was in the same boat you were in - deciding whether to wait for the better consoles and pick up a old Xbox or just go right to 360. After a lot of research online after buying my Xbox, I discovered that while the Falcon chips are now being put into Xbox360s they don't really make a huge difference in heat. The real problem is the GPU, which is getting a new chip called Jasper next summer and that will make a huge difference in performance. After finding that out, I knew I made the right choice. Plus, by that time next year I will have paid my damn car off (never buy new cars) so I'll have some extra cash in my pocket.
While you could just get a 360 and pick up games for original Xbox, not all of them are backwards compatible and some that are have flaws when run on the 360. My Xbox works fine except for some reason my discs have to be immaculate in order for it to read them properly. Not a big deal, but when you buy a used game it takes a couple tries before it starts up.
I still have to pick up some major titles like Ninja Gaiden and Halo 2. My brother-in-law tells me Blockbuster has a used copy of NG for $5 at Blockbuster, so I'm probably gonna pick that up as well.