Slashdot has a discussion on Microsoft's "free" PC and XBOX 360 game development kit. There are also other good low cost alternatives for Indie development like Torque.
I spent a few years doing AI game development at Angel Studios (2 Nintendo games, prototype networked PC hovercraft game, and a VR system for Disney) and although I have been working more on 'practical' AI applications since moving to Sedona 7 years ago, I still have a keen interest in gaming and AI for games. A few years ago I thought of setting up a cooperative game development community for fun and maybe some profit, but my consulting business keeps me too busy, at least for now. Another thing that keeps me from making a large investment in an independent game making co-op is thinking how much money was spent writing commercial games at Angel Studios: teams with dozens of professional artists, programmers, a few musicians, etc. are expensive. That said, game AI programming is great fun and surprisingly difficult.