Storage woes:
1) It will have some internal storage. Should easily be enough to download a few large games and tons of smaller items.
2) It will have SD card slots for quick and easy storage if that's better suited for the user.
3) It will have the ability to connect to a USB harddrive which will allow power users to do literally anything they want.
I don't see how anyone could think Wii U's storage will be an issue. 360 has always had a no or 4GB option and that sku has always sold VERY well. If Wii U's internal storage utilizes the 32GB memory that has become so prevalent on phones and tablets, it is more than enough for a stock beginning.
Then for those who will want to focus on digital distribution, they can choose to purchase what best fits their needs. I know I will likely pick up an inexpensive 1TB USB drive.
If the market does move to a more digital distribution, you'll want to have this flexibility as you'll likely have a wide variation on consumer needs and uses. While 10GB might be perfect for some, 10TB might be needed by others.
I haven't even used 1/4 of the 250GB on my PS3, however I have purchased mostly retail games. Next gen, I may purchase mostly digital copies.







