Why do you NEED a harddrive? I know of 5 people in my department at work alone who all has Xbox Arcades without the drives. None of them play online.
But don't need a hdd just to play online, patches for MW2 this week has been over 45mb so far....play all the courses and cars in forza3 you need to do an install...so you pay for a full game but because of your console you don't get a fair gaming experience in regards to the content available on the disc's....and there's still other stuff like ever wanting to play custom music, downloading a XBL game that is not available on traditional media, DLC...every so often a gamer comes across a game they love and just want more of it, sorry, no DLC for you...some of the 360's highest scoring content has been DLC (gay tony???)..
I'm not saying they missing it now, i'm just saying that they missing out !
And it might not be apparent or even interesting to them right now, but it's rearing it's head! Man, i could easily pose the argument that my phone doesn't need an hard drive, but i know the functionality it brings with it...
It's my spare USB storage device, i can review work and personal office documents on the fly, watch media, download games...so yeah, anyone in 2009 saying that a console doesn't need a hard drive for modern games hasn't played modern games...patches, dlc, extra hdd features (e.g. custom music), imports (GH games do imports across versions)....
Bluff everyone else, but i know the value of a hdd...