Hardware does definately make a difference, other wise everyone would be play at the speed of the slowest machine.
Dedicated servers get around this issue another huge benefit.
Yes the upgrade issue can be a problem but then it costs me maybe £300 each time and that lasts about 2-3 years. With the odd the full start over again build every 5-6 years at around £600. So not that bad really, added on top of that it's not just for playing games on.
I love my PS3 think it's great but I go through spells of playing it and always come back to the PC it has such a better variety of games.
Consoles are great though for hop and play.
Haze add Pickl3s to your friends list if you want.