Thinnest Laptop: Hard Drive For Xbox 360 4gb

Hard Drive For Xbox 360 4gb

I'm looking at getting the XBOX Kinect Bundle from Amazon as: 1.) My toddler loves playing the Kinect and 2.) XBOX doesn't seem to share my personal information and credit card numbers as my Playstation apparently did.

So, I can effectively get a $50 credit with the 4GB bundle so it'll be $249.99 after the Amazon credit or I can effectively get the 250GB bundle for $339.99 after the Amazon credit. Besides getting 246 more Gig of storage for $90 (a "mere" $2.73 a gig), WHY would I want more memory for the HD. In what cases would I need it? Can I use an external one instead?

As you can see, I'm a bit XBOX 360 clueless. Please share your Microsoft gaming wisdom with me! :)