In a bit of interesting news it seems that Microsoft has an update planned for the Xbox this year that will allow you to plug in an external Hard Drive to your Xbox 360, this could be a nice alternative as normal Exterman HDD’s are very cheap compared to the Xbox 360 Hard Drive’s.
But wait, as with anything Microsoft related there is a major catch, well, 3 actually.
1. You can only enable two USB storage devices on your console simultaneously.
2. You can only use a maximum of 16 GB of space per storage device.
3. The storage device must have over 1 GB of available space.
At a 16GB limit it’s not really giving you much space to play with, however it would make transfering things to a new HDD far easier.
Bare in mind this is no official, so watch this space.