Well the bigger harddrive would probably help alleviate some of the disc drive problems you've been having as you could pretty much install all of your games (except maybe Halo 3, unless you want slower loading times) which would reduce the stress on the drive as it only would check the dvd when you start up the game. I have pretty much all the games I'm playing installed on my 360 hdd(previously 120GB, now 250GB MW2 system).
If I was in your position though I would either wait a bit to see what happens and if MS decides to replace the Elite hdd with a 250Gb one, or see if you can find a good deal on an Elite, like these ones:
http://dealzon.com/deals/xbox-360-deals-roundup-elite-arcade-and-pro-consoles
@Amazon: $294 Elite (w/Lego Batman & Pure) comes with a $50 gift card.
Then it's up to you whether the games(which you could probably sell) and the $50 gc are worth more than the extra hdd that MS may or may not put into the Elite. If it was full price the best choice would probably be to wait a little bit and see what happens, but the Elite w/games and gc seems like a pretty damn good deal. Especially for somebody in your situation with a 360 in not so great shape and a tiny hdd.