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If BC is the only reason for not getting a PS3, you may still be able to find one of the older models that did support full BC; especially on ebay or maybe craigslist. I'm not sure how much these run now, but it can't hurt to look.

As for the 360 arcade model, it is pretty much the same system less the additional room to download content. You can always add a 20gb HD (refurbished +3mths of LIVE) through the upgrade program on xbox.com. There is also the 60gb upgrade kit as well; so you can pretty much upgrade to a pro later on.

The current arcade models (jaspers) have 256mb of internal memory, so you actually have a little space for small downloads and the NXE upgrade along with regular save game files. If you plan on going on LIVE and downloading arcade games, then you should definitely get a hard drive. I believe to play xbox games you will need to download an update for each xbox game supported; I do not know the size of the updates either.