"On April 6th, we will be releasing a system update over Xbox LIVE for your Xbox 360 that will allow USB flash drives to be used for storing profiles, game saves, demos and more. I’ve been testing this feature out for a few weeks, and I have to say it’s really great. Once you take the system update on April 6th, you’ll be able to connect your USB flash drives to your console and head over to the memory section to configure your new storage device. Once you do that, the system will conduct a one time performance and integrity check to confirm the drive is working properly. You will then be able to configure how much storage to use on the device, up to 16 GB. The remaining space on the flash drive will be accessible by your PC or Mac. USB Hard drives may work, but like flash memory, you’ll only be able to use up to 16GB of space. Since performance on flash based USB storage is usually better, I highly recommend using flash based instead of spinning media like a hard drive…it’s just going to give you a MUCH better experience."