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A mysterious hacker called "TheSpecialist" has released a new version of his program HDDHackr, which now allows you to make your own 120GB drive for the Xbox 360. It's not perfect -- you can only use a Western Digital SATA drive and you need a certain file from an official Microsoft drive. But with some time, effort, and around $80 for the drive, you'll get to keep about $100 of your hard-earned money in your nacho-cheese-stained paws. (With a little more work, you can even install the drive internally.)
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Related post from XBox scene - http://www.xbox-scene.com/xbox1data/sep/EEZZkAAAVVpHxXqpYb.php