Cool!
Glad that you can admit to some slip up's in your argument. It's good for healthy debate.
On the warranty issue, yes 3 year extended warranty for RROD and E74. Problem lies in the fact that many people don't look after their purchase slips which defeats the point of a warranty in my opinion.
In terms of DLC, yes by all means buy a console with a HDD (out of the box an Arcade of course doesn't have). That is why the Pro and Elite was released. As time goes by MS will release larger capacity HDDs. I bought a Pro as my first and only 360 thus far ... other consumers couldn't be bothered to be honest.
The Arcade is also very attractive to owners of older consoles that had the RROD or other hardware related fault as a cheap replacement. Plug in your HDD and other peripherals and you back to gaming hard.
I refuse to pay the high cost of games at retail level in SA. So I rely on the pre-played local market and importing new games. Easier on the pocket
Much respect