I've had a PS3 for around three years now and think it's a very good console. It looks good ('fat' version), is easy to set up and use, runs quietly and has (in my opinion) the best designed controller out there. I've never had any problems with mine (touch wood) and when compared to the XBox I think it's fair to say that technical issues are far less common.
Since you appear to already have an XBox, I guess the decision to buy a PS3 rests on how appealing it's exclusive games are to you. GT5 is certainly one of the stronger ones (though some of the others are also excellent) and is a must buy if you're a fan of racing. I'm not going to go into major detail because there are numerous reviews out there already. To be fair I would say that it isn't quite as 'realistic' as some of the PC racing sims out there, but it still deserves the 'simulation' tag and the physics generally feel good. I can't compare it to other console racing games because I don't have any... I only go for sims, not arcade racers. (All my other racing sims are on PC.)
As for online racing, if you use public lobbies then it's pretty much as you'd expect from any racing game. The odd decent race but mostly demolition derbies where fair play is practically non-existent. The far better option is to come and race here in the RD GT5 Club where the racing is clean, fair and organised.
The game itself lacks some of the online features you would expect from PC sims, but it doesn't really harm the experience. Performance can be a bit iffy though, and has been rather poor since PSN came back online a few weeks ago. It seems to be getting better though, so hopefully will be back to normal soon.
So, if you decide to get a PS3 then I would definitely get GT5. I don't think you'll be disappointed.