i have an xbox, and here's what i know about the following:
- Cost of the modifications needed (obviously less is better).
the cost of modding an xbox is practically zero if you take one of the routes without a modchip. you can either flash the onboard bios (which is what i did, with a switch to go back to the normal bios if i wanted to play xbox live), or there are "softmods" which use exploits in order to run unsigned code.
for modchips, the cost of chips are pretty much the same for both consoles depending on the capabilities of the chip.
- Relative ease of the modifications needed.
as Mr. B pointed out, xbox modchips are relatively easier to install than ps2 modchips, with less soldering required. there are solderless chips for both consoles, but they're not as desirable (and cost more).
the non-modchip methods of modding the xbox are fairly easy, with very little soldering if you flash the onboard bios, and no soldering if you use a softmod.
- Being able to play online with my backup copies.
xbox online gaming is free (even without modding) if you use one of the free tunneling apps that trick your xbox into thinking it's playing a System Link game over a LAN (when in reality your LAN buddy is somewhere else geographically). using these tunneling programs, you can use backups to play online. the only restriction is that the game has to have System Link capability. playing the games this way is just like playing a normal System Link game, which might not be the same as playing on xbox live depending on the game. you can't play on xbox live with a backup.
- I don't kow if it can be done, but it would be nice if I didn't have to void the warranty while performing the needed modification(s).
using softmod methods, you never need to open up the xbox. any hardware mod for either console will end up voiding your warranty (at the very least, stickers will need to be pealed back and essentially mangled in order to open up the console).
- Game selection and gfx quality.
the xbox definitely has better graphics quality than the ps2. i'll take a quote from this review of splinter cell for ps2:
In short, as you might expect, the PS2 version is similar to the Xbox and PC releases, but it isn't as impressive from a technical standpoint in direct comparison.
as for game selection, the ps2 definitely has a larger library of games than the xbox. you'll have to decide which types of games you'd rather play.
as others have already mentioned, the xbox allows you to run homebrew software, as well as put in a larger hard drive, which can essentially turn it into a media center, which is what i use mine as.