The move could well see Microsoft eliminate the current 20GB model as the cost difference will be very little. Jon Hicks, Editor of Xbox 360: The Official Xbox Magazine says: "It's only a rumour at this point, but it's a sensible one.  "With more and larger content being released on Xbox Live, it makes sense for Microsoft to offer a bundle that takes better advantage of it.

"The real news, however, would be if it meant the end of the hard-drive-free Arcade version. If Microsoft started selling all Xbox 360's with a hard drive as standard, it would make life easier for the game developers - but with such a huge install base already, I'd be surprised if they went down that route."

Microsoft also has the Elite 120GB model, and given the push the company is giving HD downloads, we'd have to assume this will be the one to promote for that function, as HD and a few game downloads will eat up space faster than hungry, hungry hippos.