I'm going to be a first time 360 buyer soon (as soon as I find a Jasper unit).
I think I'm going to go with an arcade model as well. I don't plan to go online with it (no consoles are wi-fi anyways) since I have a ps3 as well and I download demos through that (obviously can't with XB exclusive but I'm cool with that). Since it has an hdmi port, I'll just use the one I have for my ps3 as well.
The only thing I wonder is gaming without a hard drive. I checked a game like Gears of War 2 and it says it requires 10mb for saving. With 256mb I should be ok (I don't play that many games at the same time). However, does having a hard drive quickens loading times and if so how much faster? So for someone who is currently thinking of playing offline only, is a hdd worth it? This sentiment may change in the long run but theres always ebay after that...
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