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1. Go to
http://www.xbox.com/en-US/hardware/compare101.htm
for a comparison chart for all the SKUs. A 60GB version will replace the Pro version very soon (some stores already have it for sale) and that will retail for $350. You'll probably want to get one with a hard drive (either the 60GB or 120GB) if you will be doing a lot of downloading. Also you will be able to copy the entire game onto the hard drive later in the Fall for faster load times and no disc spinning. If you have a HDTV get the Pro or Elite model to use HDMI (the elite comes with the cable)

2. It offers a choice for the consumer. Some people may not have the internet, so they won't need to download anything so they won't need to pay extra for a hard drive. It also makes the console look more inexpensive to get the consumer more interested.

3. Arcade-$279.99
Pro 20GB(while supplies last)-$299.99
Pro 60GB-$349.99
Elite 120GB-$449.99

4. It depends on what types of games you like. Halo 3, Call of Duty 4, and Gears of War are some of the best shooters available. Forza and Project Gotham Racing are really good racing games. Viva Pinata is a really fun game and the sequel is coming out in September. Bio Shock and The Orange Box are game you might want to check out too. There are a lot of really good games that are coming out this holiday season, so you might want to save your money for those games.