Fret not Xbox 360 owners for we will all be privy to NXE with nary a problem. Those nasty ‘facts' from earlier in the week about you needing 256MB of free space weren't exactly true. However, you may want to have more than 128MB to enjoy everything that NXE will offer.
The New Xbox Experience will require 128MB of free space. A hard drive is recommended for the optimal experience, to take advantage of some new features, and to be able to enjoy the great movies, TV shows and games available on Xbox LIVE. While we expect the majority of consumers to download the New Xbox Experience without a problem, a small percentage of Xbox 360 owners do not have enough memory to accommodate the update. To help ensure all Xbox LIVE members are able to download the New Xbox Experience and enjoy its new features, Microsoft will be offering storage solutions to the Xbox LIVE community. We are not sharing details of this offering yet. Be sure to check xbox.com for more details in the coming weeks.
I bet MS will offer online storage solutions. Yeah, that's what I think MS will offer.