What he said.
Oh, and if you have Netflix streaming available - I don’t know what the situation is in Canada compared to the US - you can use the WiFi feature on the XBox to stream videos to it as well.
Absolutely not; If you are planning to hook the thing up to the internet, it has a better selection of quirky, interesting, unusual niche games than any other system currently on the market. You can’t get Bastion, Guardian Heroes, ilomilo, or Protect Me Knight on any other console, and you can’t get Castle Crashers or Chime for the Wii. (Snoopy: Flying Ace is also awesome, but if FPS games make you motion sick, it may have you losing your lunch. Just a warning.)
There’s a LOT of good stuff available on the 360, covering a much wider variety of options than most people will lead you to believe. It just takes a little nosing around to find it. FPS games aren’t even in the majority, they’re simply the most visible and high selling offerings on the system.
Definitely get a hard drive and yes, if you like, you can store movies on it. 
Edit: Oh, and yeah, for fighting games, the 360 is the runaway winner. And you can get the kid a fightstick for his birthday if he’s still into this stuff when that rolls around. 
Thanks for all the help, everybody. I’ve made the purchase - I went with an Xbox 360 with 250GB and Kinect. I suspect Arkam Asylum, Street Fighter IV, Black Ops and Dance Central 2 are going to be under the tree.
[thread=632060]Now, if you’d all be so kind as to weigh in on the other accessory I need - a TV. I’ve got a thread about it. [/thread]