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I was listening to a thewiire.com podcast. Number 65 (and it was truly a dreadful podcast), but an interesting tid-bit came out of it.

The guy who runs the site said that one of his aquantances who works for MS stated that MS had no intentions of making the 360 Elite until they got a "great" deal on external HDs. Because of this, they opted to create a new sku of the 360...one with a 120 GB hard drive.

I guess there is no way of proving this and it doesn't really matter cause it is out. I found it interesting and thought it was an easy way for MS to make more money.