<snip loads of xbox whining>
It's their product, they can charge what the hell they like. It may not seem fair to you, but there are enough people out there that seem pre-paired to pay.
The point is that these things have to pay for themselves in the real world, and the marketing scheme MS is using is a subscription based system to off set the lost leader they have on the consoles and to pay for the original and future development costs of the platform. Xbox live can not just be considered in isolation, it's profits pay for the hardware development.
Maybe you would like to pay 3 to 4 times the orignal purchase costs for the console, but a lot of average users (not the tech savy type like you find here) will not and it's easier for them to pay as you go.
Maybe you don't agree with that approach, then fine, you don't have to subscribe and as you say you can use a PC based system that does not require the same revenue model.
EDIT: one last thing, OSS etc preaches that software should be free and proffits made my providing a a service. This is what xbox is doing but you now seem intent on destroying that revenue model as well.