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Theres a download on Microsofts website that makes HDD upgrades very cheap. You have to buy an empty HDD case from ebay or wherever else, though. You connect the HDD you want to put in your 360 to your PC via an external enclosure and make sure its formatted, then you can install the software onto it available via MS and put in the enclosure and into your 360.

Do most people know of this? No. It means you'll have to pay a whole 20 bucks extra but you can easily put a huge HDD in your 360.

My problem is the fact that MS sells smaller HDD all set to go for rediculous prices. It does explain their release of the HDD transfer cable, though.