As described by many people, there is a very good, deciding and huge reason why paying for xbox live is far better, then taking the free playstion network, it is far, far, far better and faster!
What you pay for is money to go into development, for example the fantastic new xbox live look, avatars, far improved menu system, updates to hardware, updates to games fixing the little things (which i believe pn does little of when compared to xbl). Your paying for a fast and hastle free connection to game sessions, regardless of the game. For example, random disconnects in cod4 and cod:waw are far more frequent on the playstations free service than xbox live's far more funded and established online gaming.
Yes, £35 a year, not a month, a year, is quite the bargain compared to monthly of £6. And yes its obvious xbox take profit from this, but they also put a big proportion back into xbox live and its development.
I would rather pay £130 for a 360, then pay £35 for a proper online service, than pay £300 for a ps3, and pay nothing for a poor online service. Oh and as for play.com's price on xbox live (£35), you've come to the right place, in the shops and from xbox themselves(£40).