Yes you can play the game halo 3 on the newly announced xbox arcade sku, but only if you buy the hard drive for it, either the 20 gig or 120 gig. The reason being is that halo 3 requires a hard drive for file caching which makes the game load quicker, halo 3 does not support storage device/memory card. Other wise It's just a revamped core system, with the new 65mn cpu, hdmi port and comes bundled with a wireless controller, 5 full version arcade games and a 256 mg memory card.
This xbox 360 is now no different from any other 360 on the market including the elite, the only thing is the the elite comes with a120 gig hard drive.
Just buy the premium, its only $350 and comes with two games, forza 2 and marvel ua gold, wireless controller, headset, 20 gig hard drive, component hd cables. Basically all you'll need.
Oh and the arcade is targeted for casual gamers, all xbox 360 sku's have parental control but you must set them yourself, when you first boot the console it goes through setup such as region settings, dvd and game ratings, language etc...
256 megs is enough for just a casual gamer in the sense that they won't use live, download things, kinda like how your 8mg ps2 memory card was enough, its just for game saves.
