hehe and now that I have actually read your post! I would answer your questions but every one else kinda allready has :( so sad, any way! what I did want to say is that I baught my dad the arcade model the other day and I'm giving it to him tomorow with SBK 08 (super bike racing game) so I have a question for you! MUAHAHAHA the tables have turned!
Does the arcade have a HDMI output thingy???
Lulz!!!! lol, and i dunno didnt really check i go take a look right now! :P
Edit: No, not that i can see. kind of a bummer, but no bigie i guess, PS3's the main one i needed an HDMI for anyway, but as for your dad he may not be in luck. :/
Every 360 has a HDMI now as long as you bought it new. The old cores didn't and some of the old pros, but as far as I know that is not the case anymore.
Hard drives- If you looking for a cheap HD I would probably go with the refurbished special they got going on.
Wifi- I really hate gaming with it (tried on my PS3) and it just seemed to lag more. But if you need it you can make your own wifi adapter for just over $20 bucks, I think its called a wifi bridge.
Live- You can get a free month long trial of live when you sign up for the service. (you can do this several times actually just change your email addy but you will lose your achievements)
Batteries- You can buy the rechargeable battery packs, but I already had rechargeable batteries so I just use those. It sounds like a hassle but you really don't need to charge them that often.
Once you have been messing around with the blades, you will come to enjoy the Live experience more and more. You should try the trial first, even if you just drag out a eithernet cord and string it across your living room. There are many many Arcade games on Live that I really like and you can try the demo's for free. Lots of stuff there just go look.
As for exclusives, it depends on what kind of games you are into. Tons of JRPG's which I like as well, pluss you may be interested in a little game called Mass Effect. It should keep you busy for a while and it is dirt cheap right now. Here is a quick list of Cheap games that you need to try. You can find them on ebay for cheap. Dead Rising, Gears 1, Lost Odyssey, Viva Pinata, Kameo: Elements of Power. Lots of others out there and most you can try the demo for first.