I think it will be a usb hdd that will work with most external usb drives. Like the SD card thing. Nintendo could have made proprietary memory cards again, but they chose to go with industry standards of SD. You don't have to buy the Wii branded SD cards, you can use any of them. The same will probably be with the USB drives. They are going with an open standard and we will see a few Wii branded HDD's that will be a little more expensive than 'normal' but you will be able to get quite a few others for cheaper prices. They just won't be white and pretty. But, eh, it will be behind my Wii in the cabinet anyways.
Re: uses. I think it will be for future channels, games, and mostly demos and other online stuff. I bet there will be a 60g for $49.99.
