niksta - I would assume the 120 gb option is harddrive, the 4, 8, 16 and 32 gb are most likely flash.
As for 720p output. I did some quick calculations using the inferior imperial system, then converted my result to proper numbers to determine that the full benefit of 720p output will only be noticeable if it is within 20cm of your eyes. I would say 480p would have been a better choice in order to allow for longer battery life, and better graphics (ie better effects and things as opposed to improved resolution) in games.
Anyway, it's pretty cool to see that MS are releasing a 120 gb version - that's something that sets them apart from the Ipod touch. The 4gb seems a bit silly to me, that's really not much for a thing that can play 720p games and movies
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