Guitar Hero III is available for the Wii, XBox 360, PS2 and PS3.  I assume each game is equivalent to the others, but specifically I am reviewing the PS3 version.

The Good:
As always, the songs.  It's still fun to rock out to great guitar tunes.  There's a new mode called "Battle Mode" where rather than earning star energy, you earn power-downs for your opponent.  Some of the things you can zap your foe with include shaking their display, breaking a string, or just plain upping the difficulty on them.
The career mode adds boss battles, which unlock those characters for play once you beat them.
They've added co-op career, but since we have only 1 guitar we can't really test that out.
A wireless guitar means no more worrying about stepping on the cord.

The Bad:
It's truly unfortunate they didn't decide to make the guitar compatible with older versions of Guitar Hero.  If they had just used the bluetooth wireless built in to the PS3 rather than their own special wireless dongle, I expect it would've worked.
Speaking of the guitar, it seems far more prone to "What the?" moments.  You could be holding down a long note and suddenly it'll disappear and you'll get docked for stopping early.  Worse is the strumming.  You can't strum this guitar, or it will register as two notes (one for pressing down, one for snapping back up).  You have to be content to thumb down the strum.. um.. button, for lack of a better word, and gently release.

The Ugly:
The shortcuts taken..  small things, but disappointing nonetheless.  For example, in earlier games they motion captured the band playing the entire song.  So it looked good and natural.  This year they motion captured individual moves, and then randomly displayed those moved through the song.  Although that can make for more varied performances, the moves often don't sync with the segment of the song.  If you're listening to a particularly quiet and intimate part of the song, it just looks dumb to see your lead singer head-banging at the same time.  Also, it really doesn't seem right watching your lead singer dancing around like Van Halen with his mic stand during a Rage Against the Machine song.
Another shortcut, and this one really bugs me, is that in previous versions of Guitar Hero wailing on the whammy bar simply warbles the pitch of your instrument.  In this version, hitting the whammy bar changes the pitched of EVERYTHING.  This is particularly noticable on The Killers song (because of the synth backing) and makes me AVOID using the whammy bar because it sounds so bad.  That's a lame short cut!  Your guitar should be a separate audio track already (for when you miss notes) so why not only effect the guitar track when I use the whammy bar?

Overall:
If you enjoyed playing Guitar Hero 1 and/or 2, you'll enjoy playing Guitar Hero 3.  Just maybe a bit less.

That's too bad... question is which will you be playing more?

Which will I be playing more?  Smackdown, when it comes out in a couple weeks.  

Actually, an interesting tidbit of information.  Although the makers of Guitar Hero III couldn't get their own guitar to work with their own previous versions of the game, the makers of Rock Band have stated that they've made their game compatible with the Guitar Hero III guitar.  (And no, the other way around is not supposed to work.  Rock Band guitars will not work in Guitar Hero)

On the plus side, with GH III you can download new songs and videos off the web.

Come on Smackdown is done and overdone. Have they really brought anything innovative in the last three versions? and does slightly better graphics really make it worth getting another one?

They do add extra strategy to the game each time.  At first it was just a matter of who could get a move off quicker before the other guy blocked.  Then there was different blocks for different types of moves.  Then (the best addition IMHO) they added fatigue, so you can't just pummel the opponent non-stop without tiring.  Then they added damage zones, so that if I keep hitting you in the head, it doesn't hurt your leg.
This next version uses different fighting styles, so each character is a combination of styles and gains special abilities to their moves based on that style.  (eg, if you're Powerhouse, you literally throw the opponent across the ring when you kick out of a pin).
Oh, and yes, there is the updated graphics.  Which means I can make better looking wrestlings (Hitler, Mr. Bean, etc) more true to life.

but in the end...Monster wins