Nice they're at least offering the option, but it's still way too expensive for 250GB though - you can get a standard off the shelf 3.5" 1TB or 2.5" 500GB HDD for much less than that. The margin MS are giving themselves on that is enormous.
Isn't it a regular hard drive inside that plastic case? I'll bet there's a way to crack it open, swap in a big hard drive, and save money. AND get the satisfaction of screwing Microsoft out of some obscene profits!
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I only have a couple GB left but its all good as I pretty much play Street Fighter 4 exclusively