The way I see it, any increased optical drive that MS adds to the X360 at a later date will be completely irrelevant. It will only be good for playing HD movies, because all X360 games will still be forced to comply to the limits of the standard DVD that the original units shipped with. It's also irrelevant because like BR in the PS3, anybody who has an HDTV and really cares will buy whichever format of stand alone player they want.
If MS had been able to include the HD-DVD drives in their initial launch, it would have been of huge benefit to HD-DVD as a format, and also to MS if they were able to convice/enable developers to actually use the increased storage capacity to improve game play.
As it stands, I can envision the possibility that a couple PS3 games ship on one BR disc but require multiple DVDs when ported over to the X360. That will give X360 a black eye, clearly, but I rather doubt it would even make that much of a difference.
I wish both companies had been able to include increased capacity drives, because third parties are going to develope for the least common denominator. So while EA might have been able to make a better Madden 20XX using more space then the DVD wil allow (and would have if the X60 had HD-DVD and the PS3 BR), they simply won't do it now.
Essentially it's the same argument: the BR is a waste for Sony because it provides nothing to the gaming experience, and adding on a HD-DVD (or a BR for that matter) after the initial launch is a waste for MS.