(all credit goes to GamingTailor from the Xbox.com forums for writing this handy FAQ to the upcoming update)

As many of you already know, on April 6th the Xbox 360 will get an update, which will alow it to read any USB flash drive.

The April 6th is near (next Tuesday) so I decided to make this guide and clarify any doubt you may have. Here it is:

USB Support?
Yes, starting on the next April 6th, you’ll be able to transfer your gamer profiles, game saves, demos and more without having to buy a Memory Unit for it.

What’s the maximum capability?
Your Xbox 360 will recognise any USB flash drive with a maximum capacity of 16GB. The space you don’t use with the Xbox 360 “stuff” will be available to be used by your PC or MAC.

It’s April 6th and I’ve upgraded my Xbox 360, can I start using my USB flash drive?
No! Once you have upgraded your console, you’ll need to go to [System Settings – Memory Area] select your USB device and Configure Now (Format and Configure the Full Device), or Customize (you can choose how much memory you want configured for Xbox360 from the free space on the device.) — This part is very important; if you forget to do this step, you won’t be able to use your USB device.

I’ve done it all, but my flash drive is bigger than 16GB; what will happen?
Your Xbox 360 will recognise any flash drive, but it’ll only be able to use the 16GB referred.

Can I install games onto the Flash Drive?
Yes, the Flash Drive will work just like a normal HDD

Any USB flash drive will work?
Yes, you can use any flash drive with your Xbox 360. Although Microsoft announced a partnership with Sandisk and will sale USB flash drives pre-configurated. This way, even if you don’t have your console connected to Xbox Live (and won’t be able to download the upgrades) you’ll be able to use this new functions.

Important Notes:
– You’ll be able to have two 16GB flash drives connected to your Xbox 360 at the same time, expanding the storage to 32GB at once.

– If you’re thinking on connecting the USB flash drive with your gaming saves to your PC and “manipulate” the saves, think again. It was said by stepto that when opened in a PC, you’ll be only able to see several encrypted files. All this files, when read by your Xbox 360, make a save game file.

If you have any doubt regarding this, post it here and I’ll try and obtain an answer near an official source.