Gaming PC for cheap, that will play games at 720p (like a console) with good framerates:
http://www.newegg.ca/Product/ComboBundleDetails.aspx?ItemList=Combo.752640
Combo deal:
1x Thermaltake VL84301W2Z V3 Black Edition with 430W Power Supply ATX Mid Tower Computer Case (Model:VL84301W2Z)
$74.99
1x MSI H61M-E33 (B3) LGA 1155 Intel H61 HDMI Micro ATX Intel Motherboard (Model:H61M-E33 (B3))
$69.99
1x Intel Core i3-2120 Sandy Bridge 3.3GHz LGA 1155 65W Dual-Core Desktop Processor Intel HD Graphics 2000 BX80623I32120 (Model:BX80623I32120)
$139.99
1x G.SKILL Value Series 8GB (2 x 4GB) 240-Pin DDR3 SDRAM DDR3 1333 (PC3 10666) Desktop Memory Model F3-10666CL9D-8GBNT (Model:F3-10666CL9D-8GBNT)
$35.99
1x Seagate Barracuda Green ST1500DL003 1.5TB 5900 RPM SATA 6.0Gb/s 3.5" Internal Hard Drive -Bare Drive (Model:ST1500DL003)
$134.99
1x LG DVD Burner Black SATA Model GH24NS70 (Model:GH24NS70 OEM)
$18.99
Plus a PowerColor 6770 $110
http://www.newegg.ca/Product/Product.aspx?Item=N82E16814131434
Win 7 64 bit $110
http://www.newegg.ca/Product/Product.aspx?Item=N82E16832116986
Total: $637.98
Many local hardware shops will price match. I can go to my local Memory Express and price match everything on this list. They charge $70 to build the PC.
Add $50-80 for a mouse and keyboard.
You can definitely go even lower end on the CPU and RAM, even on the GPU. I frequent hardware sites where many people claim to enjoy gaming just fine on their 5670s, 5750s (and similar 6000 series cards) which are all under $100. Core 2 Duo and AMD Athelon CPUs would shave a solid $100 or more off the price.
I omit a monitor because you can buy a monitor or a TV and use for both console and PC gaming, so it kind of negates itself.
A console, then, is $250-300 plus peripherals - extra controllers, docking station, headsets, camera, Move/Kinect, etc etc you probably spend $400-500 on hardware. Considering games are anywhere from $10-50 more expensive than PC, if you buy a game or two per month that cost is really adding up fast.
As for PC upgrading, this PC won't need a thing for at least 3 years, at which point you MIGHT want to upgrade the GPU and PSU - but if that's the case, it will be more of a want than a need, because it will keep on playing games at decent settings. But maybe you want 1080p and some antialiasing... well, a $250 GPU and a $100 PSU will get you there and keep you going for many years more. Nothing else will need to be touched for at least 6 years.
EDIT: Just to show, in this benchmark the lowest resolution is still higher (and more demanding) than the 720p you get on 90% of console games... notice the $80 5750/GTS 250 are able to play it pretty well at High settings: