Woah, I guess don't play games and have no experince. The 360 does not double as a blue ray player and there is currently nothing available to play blue rays with the 360. However the Playstation 3 doubles as a blue-ray player. You are correct though that the Wii is better for younger kids. It has a lot more titles marketed towards a younger audience, not so many violent games, and it will get them some exercise while they play.
The difference with all the consoles is the size of the hard drive and various accessories they come with, the actual console is the same through all the models except that the Elite is black. For a while the Elite was the only one with HDMI, I think this has changed and is now on all 360's but I do not know for sure.