We have the option of an Xbox 360 or a wii. Should I get this or the Mario kart for the wii?
If all you want is a "fun little kart racing game", then mario kart.
This game is a bit more intense, and requires (some) skill to drive. Its just a straight up racer, but with items.
The stages are definitely the highlight of the game, though.
If you want the best of both worlds, get the first Sonic racing game, Sonic & Sega All-Stars Racing. Its more like Mariokart, but faster, with better levels.
This one, if you can get the hang of things, is much more intense an amazing. First had more good levels though. In this one, you'll often find yourself only settling on like...4-5 tracks you like. They are kinda hit or miss.
Mario Kart is a more accesible kart racer for the casual crowd with its chaotic nature of the weapons and doesn't largely focus on the sense of speed. Sonic Transformed demands a lot more skills what with its higher set speed and the vehicles feeling less like go-karts and more like actual racing vehicles. Akin to some of the more action based racers out there like Split/Second, Blur, and to some extent, Project Gotham Racing. Using the weapons involve aiming and dodging, so it's got a more risk-reward nature.
So it depends on how your friends are. If they are all in it for simple fun, Mario Kart's the best way to go. If your friends desire for something more challenging, Sonic Transformed. If you want the best of both worlds, the first All Stars Racing is a good choice too.
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This game is great and even trounces the original in variety, track design (more track themes and more interesting in design, you'll certainly want to replay more than 4-5), and even the transformation gimmick keeps things interesting. Heck, some tracks change every lap.
It is a little less accessible than Mario Kart though due to feeling more like an arcade racer than a kart racer, as well as a faster pace.