8GB would seem to suggest that the console doesn't support game installs. Players might consider this a plus, but to developers, it isn't.
This omission was one of the main complaints voiced by 360 developers dating back to the platform's first year.
SD cards are not a substitute for HDD. Currently. Data transfer rates for standard Class 10 SD cards are about 10MB/s compared to the current average 2.5" HDD of 100-200 MB/s. Faster SD formats (UHS-1/UHS-2 compliant) are of limited availability (UHS-2 under development) and quite expensive. Current UHS-1 cards top out at about 45 MB/s at a cost of about $150 (low) for a 32GB card. This is not to say that Project Cafe will even support UHS-1/2 compliant SD format cards.
The output resolution is a bit less of an issue given the consideration that the console actually pipes additional video signals to each controller. Without the details on how this works, no one can really comment, but if a game rendered 720p for the main display plus a pair of 480p signals (also processed by the console) transmitted to a pair of controllers, that would take about the same amount of processing as a 1080p signal.
Rather than support 1080p for single player games only, they may have opted out of that display mode altogether.
I won't say that this is an acceptable explanation, just a theoretical one.
The assumption should be that the current default HD display/TV is 1080p though.
