Personally I have both XBox and Playstation 2, and don't really see much difference in the graphics or the game selection. Hubby likes the Xbox and I like PS2, and the only real reason being is the way the controllers work and feel and in my hands. I have a hard time holding the Xbox controller and pushing the right buttoms, I find it big and bulky, but hubby loves. I like the PS2 slimmer types better.
I would suggest looking at the prices you can find for the systems, and looking into specific games your children would be intrested in and checking out what platforms they are made for and their price.