Once again, they're generic. The freight cars in a typical set by Bachmann or LifeLike look okay, but would pale when compared by comparable cars by Athearn, Atlas or LifeLike's Proto 2000 line. Of course, the lack of detail can be a good thing if the set is for a child. There is less to break. Some train sets have steel track.
Steel is okay, but nowhere near as good as nickel silver.
We've found that the track included in most HO and N sets is steel. There are better train sets out there and they cost more. They include better track, better cars and locos, and better all-around quality. Cheap is fine if all you intend to do is run them around the Yule tree. Better HO and N sets are available from LifeLike, Atlas and Athearn.