This essentially amounts to MS giving away HDDs to Arcade/Core owners, which could mean either MS has a ton of 20GB drives that can no longer be sold with the upcoming 60GB starter packs, or that the upcoming 360 reboot will require an HDD for more standard functions. Maybe both.
If the Arcade SKU is to be continued, now would be the time to buy one with this promo as once the 20GB drives are gone, the options are stick with a function limited 360 or buy a 60GB starter kit for $99, which is actually not a horrible deal considering it comes with a headset and 3 month XBL card.
As for the deal stealing any sales from the Wii; not likely. It has nothing to do with value as consumers will buy what they want. If they're looking at Wii Sports, Wii Fit, etc. you're buying a Wii regardless of price.
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