Actually, as of last fall, the 360 can output in 1080p, though it still lacks HDMI-out.
Anyways, in terms of absolute raw power, the PS3 and its Cell processor come out on top, without a doubt.
Though you have to factor in other things. I've been hearing from developers that the PS3 is harder to develop for, and making effective use of all the Cell's SPE's takes a bit of skill. As of right now, the PS3 and 360 look about the same if you compare multiconsole titles (in some cases, PS3 games experience some graphical hiccups) but neither system is being pushed to its limits at the moment. I'm sure in time, we'll see MUCH better-looking titles to appear on both systems, but right now, developers are still learning how to take advantage of the PS3's Cell, as well as the 360's triple-cored processor. So, in the meantime, lets just all enjoy the good games.
