First of all, XBOX Live was available on the original XBOX and it's still the only one that costs money to play games over, $60 a year.
Next, TV's don't always improve resolution and sound. Ever heard of Digital as opposed Analog or Satelite. New, better, more original way to deliver the product.
The Wii's improvement is much better than the XBOX to the 360, and it appeals to people. Also consider the price. 250 dollars with an included game that most people only play is much more appealing than 450 dollars.
Xbox live is much better on the 360 and its the best online gaming hands down.
I don't think the wii's advancement is better than the xbox but to each their own. enjoy