Yeah that is my thoughts leave the internal expansion to a 1-2TB for native PS5 games only and then a 1250+ MB/s range M.2 drive externally to store BC games on and overflow for PS5 transferring if required. I was pricing this up around a couple of weeks ago and the low end M.2 drives that would max out the 10Gbps of the USB ports aren't much more expensive than a 500 MB/s SSD and with the adoption rate of NVME increasing it could even be cheaper in a years time.
Faster connections than 10 Gbps wouldn't help much for external NVME-SSDs:
F. e. an external SSD with Thunderbolt 3 has huge speed advantages in benchmarks:
But these benchmarks only show the first few seconds, only 1 GB or a few GB are copied for the benchmark.
If you copy/move bigger games (f. e. a 100 - 200 GB CoD game) or several games at once, the difference will get insignificant.
Even the average transfer speed of a Samsung Portable X5 with Thunderbolt 3 falls to ~600 MB/s moving a 390 GB Steam library:
Part of the problem is the extreme throtteling of the SSD due to thermal problems in small external SSD cases.
The X5 went down from 2440 MB/s to 244 MB/s (one tenth!) the moment it reached 55° C: