Both great for online play and PSN probably is slightly better in that department as quite a lot of games provide free dedicated servers. (think it’s first party only, but that’s still a good few games)
However PSN lacks voice messaging, quick friends list navigation (in-game navigating your friends list can be awkward as it loads kinda slow at times), it also lacks player profiles and trophys are nowhere near as well implemented as achievements are.
As a complete package, PSN loses.
A lot of games have free servers, off the top of my head Resistance 2, Warhawk and Killzone 2 have masses of free dedicated servers (lag free of course)
Mostly though it’s like Xbox Live, peer2peer.
Live runs a lot smoother? Lol what a load of BS, PSN is stable as is XBL, if you get more lag on PSN than XBL then that will be because you’ve gotten unlucky and joined a bad host.