I predict Microsoft will be getting rid of the sku very soon now.

With the introduction of the Xbox Experience program, there's absolutely no way Microsoft still keep Arcade package they have today.

For those who don't want to play online or care about using it as Multimedia device (like myself), I recommend you get one now.

Or you could think that MS will merely upgrade the Arcade to include a 512MB card versus the 128mb or whatever they have now.

 Are you sure they don't include a 512 mb now?   Maybe that is only in NA.  My nephew wants a X360 and he got a folder where it stated that you get a 512 mb memorycard when you buy a X360 arcade.

They come with 256mb card now

According to Amazon, it's a 256 MB card.

http://www.amazon.com/Xbox-360-Core-Arcade-Bundle/dp/B000WENLBY

And I agree with mrstickball, I think they will just start packaging them with 512MB cards when the update rolls out.

wouldn't make sense business wise, now that they are partner with Netflex.

including 512mb would only be a temp. solution until the next update, which is very likely include something that will need more storage.

 Netflix doesn't download the entire movie, though--it's a streaming-based service.  It says on that memory-upgrade site that Netflix only needs 8mb, so the memory card would be ample.

However, I still think they'll stick the 20gb hard drives in with Arcade models now.  The Premium is still a 'better' console since it gets 60gb now, the only option they're giving current owners from their site is the cheap hard drive, and the actual movie download service (not NF) does actually take up lots of space.  Simultaneously, they're pushing the ability to install games to the hard drive, and they're taking a ton of flak from developers for not allowing them to stream from it.   Not to mention, you're right, the next update will obviously need more space.

You both have it wrong IMO. I think we will see a 20HDD arcade for the same price hence the temp selling of 20HDD. In addition with the 160GB PS3 coming out MS would want to top that in HDD space so I believe it would be like this:

20GB Arcade (20GB increase)

100GB PRO (40GB increase)

180GB Elite (60GB increase)

this will make the Pro and elite once again more value for money and the better choice.

It doesn't make any sense for Microsoft to produce 20GB hard drives anymore. They are probably the same in price as 40/60GB. But as long as Microsoft continues to improve the hardware and move the CPU and GPU to a smaller architecture that uses less power and produces less heat, I wouldn't be surprised to see the Arcade go down to 149.99 next Christmas season.

I think the upgrade program is great.

im waiting until RE5 releases.