The "arcade" version mostly relies on memory cards, so ithe hard-drive isn't all that necessary.
However, the bigger version comes with full hard-drive, and wireless controllers, plus one of the best launch games for the 360... GRAW turned out to be enough fun to last me until Lost Planet.... and then Halo 3... and next comes Mass Effect.
Which reminds me I seriously need Mass Effect. I've been playing shooters only for the past few months, completly ignoring my Kotor games. So I need a new RPG and quick.