On the website of the spanish retailer GAME has surfaced a version of the 360 arcade with 512mb built-in, available from June 3 onwards.

relevant link: http://www.game.es/ficha/ficha.aspx?SKU=060713

Ah well, assuming the link's not wrong, and assuming it would have been confirmed at E3, that's one less surprise.

Get used to it, Redmond leaks like a sieve =)

Still until E3 we won't know if it's just a retailer mistake or a honest-to-good leak...

Thats cool if true.

Oops, I read the Spanish site wrong. I'll edit this comment out.

Must be cheaper now to purchase a 512 chip rather than a 256 chip.

512 MB is practically no space, though I guess it's better than no space.

Sounds about right, the arcade will always increase it's on board memory just as the cheapest amount will double in size every year, plus this puts it on par with the Wii.

2 GB would be better. My nephew is an arcade owner and wants to pick up GTA lost and the damned but he can't because he has no space and considering HD's cost a lot X_X.

 It is like $20 at ebay for a 20GB HDD.