Well, overall, I'd note that current Xbox 360s have more or less put the old infamous "red rings of death" problems into the past. Similarly, other infamous hardware issues have mostly vanished.
As for the Kinect, I'd caution against jumping for it. As of now, there's perhaps only a tiny handful of games that are actually any good that make use of it, like
Wipeout, and possibly some of the dancing games if that genre suits you. The rest tends to mostly be snowboarding games and sports/minigame shovelware.
If you have the space for it, and have friends over who'd be into casual/party gaming like that, then the Kinect would be a good buy. Otherwise, pass on it, at least for now.
They're great but definitely wait until Black Friday. I've heard a 4gb Xbox will be $99 which might suit your needs especially considering the next generation Xbox will supposedly be released in December 2012.
You can consider any rumors for an Xbox 720/1080 in 2012 to be false. The nature of console hardware development is such that you'll know about it typically 2-3 years in advance. While the final name might not be revealed until close to release, important information becomes credibly circulated, (such as featuring in articles on multiple prominent tech sites) rather than "I heard someone say..." So this means that if important tech stuff spills on it tomorrow, the earliest to reasonably expect a successor to the Xbox would be for the holiday season in 2013. 2014-2015 is far more plausible.
Similarly, unless anyone specified someone's ad, I highly doubt that you could get an Xbox 360 4GB would retail for $99US, as that'd almost certainly be below the actual cost to the retailler; $149US is more likely. (and I've actually seen news sites referring to that point... As well as $199US for a 360 4GB + Kinect)
This is the main reason I would never buy a new game for my PC or laptop, the effort of keeping upto date and shelling out for those upgrades is a complete turn off.
You don't need to upgrade on every new game. After all, new parts only come out every YEAR or so, and even then, you don't need to upgrade.
Skyrim will play on maxed settings on a several-year-old video card, for instance; and that will be better-looking than either the PS3 or Xbox 360 will have the game.
Also, $500US can build quite a reasonable gaming computer, believe it or not.