That hard drive right there is the model of hard drive used in the new $400 Modern Warfare 2 Xbox 360 250GB “Super Elite” bundle. It is also available, without Microsoft’s blessing, for $50 from Newegg.com. (The largest hard drive you can buy from Microsoft is 120GB, for $150.)
Microsoft is pushing HD video downloads and larger XBLA games, but the 20GB hard drives that most of us have just won’t cut it, and the retail 120GB drive is priced ridiculously. So, I bought that $50 WD2500BEVT drive, and a replacement hard drive shell from DealExtreme.com for $10. I then followed the instructions found here, slapped it all together, and popped the new module into my Xbox. I was prompted to format when it recognized the drive, and now I have a fully functional 250GB hard drive in my Xbox 360.
(Please note: DealExtreme is awesome, and there is a lot of really cheap, awesome stuff you can buy from there, but it takes FOREVER for it to ship, because it’s shipping directly from Hong Kong. It took almost a month for my Hard Drive shell to get to me.)