I used to have that same receiver and had the 360 and PS3 running HDMI to the receiver. I did have some audio issues with the RX-V1600 with the 360 when using HDMI, so I used component and optical. However, the PS3 was perfect, no issues there. The 1600 can accept audio from both, and if it doesn't you need to change your receivers settings to not pass audio through to the hdmi output. The only advantage to having the PS3 connected to the receiver with HDMI is for the audio. If you watch Blu ray movies, your PS3 can decode TrueHD to PCM, and your receiver will output it as 5.1, and you can overlay the PLIIx decoder to get 7.1, as well as 5.1 PCM audio for games. The 1600 won't accept a 7.1 or 6.1 PCM over HDMI, but it will do 7.1 with analog inputs. I recently upgraded to the RX-V1800 to get 7.1 PCM over HDMI and 1080p, since the 1600 only does 720p/1080i. So you have to determine what is more important to you, the 360 won't be an issue so much, I would keep it connected to the tv's HDMI so you can get 1080p, but for the PS3 you have to decide what is more important to you, 1080p video, or the better audio quality you can get with PCM/TrueHD.