Xbox Live’s @MajorNelson let everyone know via Twitter and his blog that an Xbox 360 update is coming on 6 April that will enable you to use your own USB Flash drives on your Xbox 360 console for storage of profiles, saved games, demos, music and videos.
There are some caveats according to @MajorNelson on his USB Memory Support for the Xbox 360 coming April 6th posting:
You can have 2 devices connected to the console at a time, enabling up to 32GB of simultaneous storage. The system won’t just configure the device once it is connected to the console. You’ll need to head to the memory area in system settings, select your USB Device, and choose from Configure Now (Format and Configure the Full Device), or Customize (you can choose how much memory you want configured for Xbox360 from the free space on the device.)
He has also posted several screenshots on his flickr feed from the developers kit to show you what the new set up will look once you get the update:
Several months ago I updated from my original 20GB hard drive to a 60GB unit and have been pleased with the extra storage space but I still run with about 10GB spare at any given time. With this update I will be able to add up to 32GB of additional storage and increase it. I plan on then storing game profiles and saves on the USB storage and leave the main game files on my hard drive. I think there might be some room for DLC as well.
If your still using the old memory cards then this will expand your storage and give you quite a bit of room for all those extra items you want to have handy.
Let us know once you get that update on the 6th of April and how you plan to use the new space to store your stuff.