Xbox 360 May Support USB Storage with Update
Joystiq reports it has a document confirming an Xbox 360 update that will allow the device to use USB storage units. There is a 16GB cap on the USB mass storage, but you could conceivably copy an entire disc-based game onto it. It could give Xbox users an easy way to add the storage they've sought.
The document, authored by a senior software development engineer at Microsoft, states that due to "increased market penetration of high-capacity, high throughput USB mass storage devices, a 2010 Xbox 360 system update" will allow consumers to save and load game data from USB devices. The update is purportedly coming in Spring 2010.
We've contacted representatives at Microsoft to confirm the information. Joystiq claims two unidentified sources vetted the document, and we have to agree with them that the logic of allowing USB storage options is sound -- especially with all these rumors of an Xbox 360 Slim model floating around.