The usefulness of a harddrive as a performance enhancing piece of hardware cannot be denied. It provides the ability to cache large amounts of data, allowing for full persistent worlds WITHOUT affecting the amount of available ram in the system.
Of course there are examples on the PS2 of persistent worlds, it's not as if a persistant world can't be done with RAM, but it reduces the amount of ram you have available, hinders your system performance, and because of that it doesn't happen hearly as often. It becomes a trade off which is not a good thing.
A harddrive is superior to a memory card in every single way and there is not a single argument I can understand as to why anyone would prefer or support using a flash memory card in such a powerful machine like these consoles in the year 2005. Nevermind the reduced loading times, pre-caching, and nifty features you can do, the performance advantage of allowing huge persistent worlds WITHOUT affecting RAM is reason enough that all consoles should have a HDD.
Do you really want developers to have to choose between their amount of RAM available and whether or not to have a persistent world? Every game should be like halo, every weapon, every vehicle, every gun, every grenade stays in place for huge distances, mercenaries, KOTOR, Mechassault 2, Fable, Elder Scrolls all shining examples of where the HDD allowed for full persistent environments without requiring that data to be stored in RAM wasting space.
Did you know Forza remebers every tire track ever left on every track throughout your career? Courses start off clean, and after a few months are completely marked up from your own turns and braking, now in my opinion that's cool! Mercenaries has huge environments that stretch for kilometres, and remembers every blown up building, statue, wall etc in the entire city. There are many games that have persistent worlds on XBOX, it's something I've become used to and was hoping would become a standard in the future.
People clamor they want NEXT-GEN real worlds where every bullet leaves a mark that stays, where bodies never move, with fully destructable environments that stay in place, well if we really want all that stuff to be STANDARD in gaming, these consoles need a HDD.