Geez, I'm asking too many questions around here today.
There's currently a deal around here to get one of the new 4GB 360s for $150, with the possibility of it maybe going for $100 (if you sweet talk the sales people). Seems like a decent deal for what it is.
I'm not sure how much use I'd get from such a small amount of storage, though.
So, how important are game installs on a 360?
That's the Arcade, right? For $150 it's a good deal, and you can add a hard drive on after the fact for ~100 used for the 120GB. (That's what I did)
Game installs are uber-important, honestly. The system is obnoxiously loud when it's spinning the disc, and reading from the HD is faster, along with being quiet. Plus, it's less wear on the lens.
You'll install approximately zero games on the 4GB internal memory.