We have attained from a reliable source that Microsoft WILL be replacing the 20GB hard drive on the standard Xbox 360 with a larger 60GB version. Dates are not nailed down, but source say Microsoft wants it done by around July.
At this stage how this move will affect the Arcade is unknown. A price cut is widely rumored to be coming this month but - at least for now - it is unlikely to also be the beneficiary of a hand-me-down 20GB hard drive.
Back to the facts however; let me tell you this: if you’ve been saving up for a 20GB Xbox 360 hold off. The 60GB model IS coming and that is a fact.