I'm really hoping that the rumor's about the XBOX 2 having different versions with and without a HDD are bullshit. It SHOULD be obvious that the Add-On HDD on the PS2 was a complete failure, used mainly by people who wanted to copy games to it. The fact that you could use HDD Loader + HDD to run copied games WITHOUT* a modchip should be incentive enough to avoid making the same mistake (the XBOX at least requires you to mod it).
So, given the track record of the XBOX and PS2, two options should be apparent: 1. No HDD support at all, or 2. A HDD with better security should come standard.
Regardless, all this speculation is starting to get old. We are reaching a point where M$ will be releasing information on the XBOX 2 soon..
*I am fully aware that not all games could be run using HDD Loader without a modchip.