Xbox 360 USB Flash Support Update Now Live
USB memory devices can now be used to store game saves, profiles, demos, and more.
'As previously promised, a title update for the Xbox 360 went live this morning that adds support for nearly all USB flash drives (and even USB hard drives) up to 16GB in size.

Microsoft's Larry Hryb confirmed release of the title update today, which will allow gamers to use external flash drives to store just about anything that previously had to go on a 360 hard drive -- including game saves, Xbox Live profiles, and any downloaded game demos.
To use a USB flash drive, you must first configure it in the memory area of the 360's system settings menu. You can choose how much of your device to commit to 360 use (up to 16GB), but note that for however long that portion remains committed to the 360, it won't be usable when you connect your drive to a PC or Mac -- only whatever space you didn't commit to the 360 will remain accessible.

To support the new functionality, Microsoft has partnered with SanDisk to create 360-branded 8 and 16GB flash drives for release in May. Do note that these devices are rumored to cost between $40 and $70 (via Kotaku), although Microsoft hasn't revealed any official pricing details. Still, any standard USB flash drives will work, so it shouldn't be an issue if Microsoft decides to stick with their unreasonably expensive pricing tendencies when it comes to official 360 storage devices.  Kris Pigna