If you plan on purchasing a Xbox 360 Arcade Edition in the future and when you get it home there is no external memory unit (256MB). Have no fear, Microsoft has revealed that the Arcade Edition has a hardware revision and the memory unit will be internal memory and it will still have 256MB of memory.
“We are constantly updating the console’s more than 1700 internal components. We can confirm that we are moving to internal memory for the Xbox 360 Arcade. The physical internal memory is the same size as the previous external memory units — 256MB.”
So what does this mean for the consumer, well my take on it is if you want memory on the go you will still have to buy a HDD or now a external memory unit it is nice that you have the on board memory for NXE but no memory for you to take with you.