I haven't payed much attention to the ads but the absolute basic bare bones model that you could get would just be the 360 and one controller. No hard drive, no game, nothing. Just the machine and a controller.
If you're going to get a 360, get one with a hard drive. You can buy storage for save games and such that fits in the controller but then you can't have the vibration module in the controller too and it's just a hassle overall. If the 360 doesn't come with a hard drive, which it may not for $199, you can buy a 20GB hard drive for $20 or so. If you're going to be using Xbox Live then you have to have a hard drive. Xbox Live was recently updated and it required a 128mb download to the hard drive, so now you can't access Xbox Live without the update.
Xbox Live costs $60/year if you pay all at once. I believe there's also a per month deal if you want to go that way. I think it's $7.99/mo or so, depending on how long you want to sign up for (12 mo's or 6 mo's, I think). You'll also need a high speed internet connection such as DSL or cable.
Yes, games are $60 each though you can usually get the *much* cheaper if you buy them used from Gamestop or E/B Games. You probably wont find the newest releases that way but you'll find games that have been out a month or more and they'll be anywhere from $14.95 for the games that are a year or two old up to $39.95 for games that are 6 months old or so. If you want the newest releases as soon as they come out you're going to have to pay the $60.
To buy a 360 and completely set up Xbox Live would cost you $199 plus $60 for a year of Xbox Live access, assuming the $199 Xbox deal comes with a hard drive, so you'd be paying $260 or so and you could pick up some used games for another $50 if you were so inclined.
If the $199 Xbox deal *doesn't* come with a hard drive, look at spending another $20 or so for a 20GB hard drive. You may have to buy a used one to get it for $20 but it'll be guaranteed to work so there's no reason not to buy a used one if you don't get it in the $199 deal.
As far as the Wii being cheaper, well, yeah it probably is. Then again, it depends on what you're looking for. If you're a casual gamer who rarely plays games to begin with then the Wii is probably a better choice as that's who it was developed for and who it's marketed to. If you're a gamer who is really into it then the 360 is where all the blockbuster titles will be. Personally I wouldn't have a Wii if they were giving them away for free. Not because it's a bad system but because the games on it hold no interest for me. The 360, by contrast, has the games that interest me so, even though $60/game is painful, I'm willing to shell it out and pay for Xbox Live too.
Hope that helps.