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1)I have the Arcade model (Duh.) soley for SO4 and SO4 alone, yet games like LO and IU peak my interest but i heared both IU and LO require an internet connection for some sort of weird update for both games, and i dont plan to buy that Wi-Fi thing so is there anyway around this issuse or am i damned?

plug it in with a regular network cable

2)Can i freely upgrade my 360's HDD at some point if i so choose, and if "yes" then is it simple like the PS3's HDD swaping?

You need to get one of the 360 HD's. Pretty sure they are still doing the 20 gig refurb upgrade program for Arcade owners

The interface is very odd to me, i may have played games at my local wal-mart and Gamestop but NEVER used the interface once during those times, and it feel very unstable and awkward VS the PS3's XMB any hints or tips to get my self use to it quicker?

You get used to it. I like it more now, then when it came out

Is there anyway to charge up my 360's controller without using batterys? Via what PS3's does when connected to a USB port.

yeah buy a rechargeable battery pack for your controller

Xbox Live, ... this may sound absurd... but truth be told i dont know what exactly it is and how to use it, i know this isnt a big deal right now since i dont even have wi-fi or an ether-net cable but i'd like to know more about it since it seems top-notch, i'd also like my own personal review of both XBL and PSN.
What sorts of XBL memberships are there? i always thought there was only gold but my buddy from PSN says theres Silver and its free but you still cant play online, is this true or false?

Silver is free. You can do everything but play online, and some demo's you don't get right away. You can do everything else