After the September price drop, the least expensive 360 model is selling for $200, $50 less than even the Wii. While the Arcade unit doesn't come with a hard drive, Microsoft is seeking to fix that and has launched a promotion giving Arcade users the choice of a free 512MB memory card or a $20 refurbished 20GB hard drive. Gamers need only to go an official Microsoft page and enter their serial number and console ID to see if they qualify; it appears that only Core or Arcade units can take advantage of this promotion. This is Microsoft's answer to their promise of a "storage solution" in order to allow all gamers to take advantage of the new UI and Avatar functionality (similiar to Wii’s avatar) launching on November 19. That update will require 128MB of storage space, which would leave precious little space on the Arcade's included 256MB stick.
Source:→ Ars Technica