I'll grant that the Playstation is more expandable... but that's because it lacks a lot of the functionality already built into the X-box. Playstation 2 lacks a hard drive (8 gig) and an ethernet adapter.
Playstation 2 undeniably has a better library of games, and will continue to do so for the near future. With backwards compatibility, you have the whole PSX library in addition to the new PSX2 stuff.
However the X-box is the better piece of hardware, and should be capable of far more than the PS2 can deliver. As for GTA 3... I'll grant that's an excellent selling point, but GTA 3 is supposedly being ported to the X-box. Supposedly there are some exclusivity issues, but I'm keeping my fingers crossed. Until then, I've got Halo, Max Payne, etc...
Bottom line:
They're both good systems, but from what I understand Microsoft is selling their units at a considerable loss.