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I agree with others here who say that GTA4 requiring a HDD is highly unlikely. MS would just not allow this. However, it's not completely out of the question. Nintendo required you to buy the RAM upgrade to play Majora's Mask.

Can you attach any external hard drive to the 360? If not, MS could possibly start selling a proprietary HDD if enough developers make enough noise about this issue (if it's an issue at all).