*Sighs* Forewarning: the following is a rant on my personal opinions on the matter. If you are easily offended by other peoples opinions about stupid things that don't really matter, please don't read. Thank you.
I see what Microsoft is doing. It's the same thing they've done with every other possible technology-related application. They take a glance at other companies, see that they are being successful, then try to imitate that success by duplicating their technologies within limits of intellectual property protection statutes. Google got a lot of acclaim for their search engine. A little while later, guess what Microsoft started advertising? Windows Live Search. Apple made Mac OS X. Microsoft's answer? Windows Vista. Sony made the PlayStation line. Thus was born the Xbox. Microsoft is like that guy in the bar that always has to do you one better when you're trying to get the girl.
This just proves that they are trying to integrate another one of Sony's technologies. With the PlayStation 3, you can install games directly to your hard drive and you do not need the disc to load the game. Additionally, the PS3 uses SATA-based hard drives that are easily interchangeable and doesn't void the unit's or the hard drive's warranty. This means that as hard-drive storage technology continues to advance, PS3 users will easily be able to get larger hard drives for a relatively consistent price. The 360, though? Not so much.
The 360's hard drive is a SATA hard drive that they felt they needed to put in a pretty little enclosure and wire to a special interface. This means that only Microsoft (and people willing to crack open the enclosure) are capable of using different hard drives. Tampering with the enclosure at all will void the warranty on your hard drive. In addition to that, you are limited to the newly outdated 20 GB, a 60 GB, and a 120 GB hard drive.
Now, each DVD ranges anywhere between 4 GB and 8GB in size. Assuming you were to put nothing but games on a 120 GB hard drive, not including DLC, that's about 15 games that you would be able to install on it. Modern laptop-compatible SATA hard drives can reach two to three times that amount of storage capacity and they will only continue to increase with time.
Granted, this would be beneficial for several disc-intensive games, such as Grand Theft Auto IV, in general it's applications are limited. A real heart-breaker for me was the fact that you still had to have the disc in the tray. Now, rather than being able to put the discs away in their cases to protect them, I'll be forced to put them in the tray so that the system can read that tiny barcode on the innermost ring.
I am glad that Microsoft is choosing to broaden their horizons, but until the Xbox team relaxes their DRM policy and provides more choices (and more reasonable prices) on their hard drives, I don't see this becoming a popular function from the start.
And just an off-topic comment, but I think that the new interface looks too...bland, am I right? The empty silver background, the static, out-of-place icons; I like how they're trying to imitate the XrossMediaBar, but it needs polish. A lot of polish. I mean, I love my 360 the way it is right now. I'd be fine with them just adding in the extra features and keep the current Dashboard.
Anyway, there's my two cents.