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If MS stuck in a 20 gig into the $200 Arcade (would it kill them to do that? I don't think so. 20 gigs is cheap), I think it would give the 360 more of a competitive advantage. The Arcade is so barebones that it isn't worth buying one unless it's a replacement for a dead xbox (since you can use your old hard drive). Chances are the memory unit that comes with the Arcade isn't going to hold you over game save space wise for the duration of the gen. And the NXE update is well over 100 MB.