Microsoft’s Peter Moore told Kiziko during E3 that due to the large amount of downloads and downloadable content on Xbox Live, they might consider upgrading the 20 GB Hard drive in the future.

“There’s going to be a time when we need to look at what we’re doing [with hard disks] – but no announcements now”. (…) “We continue looking at the hard drive, we’re looking at the behavior of what people are doing with their hard drives,” Moore had said. “Clearly when you have a million downloads you start looking at what you need to do.”

It would certainly make sense to offer larger drives for people with the need. 2.5″ disks (used in teh Xbox360) are getting cheaper and cheaper, and within a year, you should be able to get a 40-60 GB at the same price as a 20 GB today.