In my experience, it goes like this:

Macs are VASTLY superior for Audio, Video and Graphic work. They are stylish and easy to se. The OS is simple and intuitive for new users, but also deep and feature-rich for more hardened UNIX users. Macs are more expensive, yes, but they're worth it for the peace of mind and ease-of-use.

PCs are the only way to go for gaming and most office work. They're cheaper and easier to find parts for. On the other hand, they're very easy to break, the OS is frustrating at best and they catch viruses very easily.

I bet you can guess which path I took when getting a computer...

Hardware in a Mac and a PC is virtually the same. The time when PowerPC architecture was used is long over.
Also you can install OSX on any x86 system (if hardware drivers exist).

The only thing that you pay for when buying a Mac is the Apple brand. That's the same with the iPod, iPhone, etc. - people buy it because of the brand, not because it's a superior piece of hardware. Second point is something you already pointed out - style. People buy the stuff because it 'looks good' (whatever that means). Another reason why so many people are running around with iPods. They don't know they have bought a product that is technically inferior to other products on the market. They've bought it because "everyone has one", "it looks good on me" or "because you aren't cool without it". AND because it's Apple - an expensive product can't be bad... *lol*

Maybe it's just me though, but I've found my Macbook Pro to be better for productivity stuff. It's easier to keep multiple apps running, and running around between Mail, iCal and Word is really easy.

Oh, and Office 2008 finally comes out soon. No more Rosetta crap from then on!