Honestly, I get a little fed up with these space debates, what's enough and isn't enough.
This is especially true any time the word "needed" comes up. Strictly speaking, virtually nothing is needed. You have a way to process your data, a way to accept imputs, a way to get your game to the consumer... A developer designs a game within the constraints of the system, not some imaginary box titled "what we could use." If you "need" more than a DVD's space, then you most certainly "need" 96TBytes of RAM, 5 Petaflops of CPU/GPU performance, a system that transforms what you're thinking into an actual model that works perfectly within your game environment, and so on. Sure, purely semantics, right? But the way some people structure arguments around that word sometimes makes me think the word shouldn't be used at all.
There's no doubt the lower amount of space is a huge inconvenience. It would have been great if MS could have shipped with HD DVD, or better yet, holographic versatile disc, or better yet, Several hundred gigs of HDD space and a downloadable game pipeline. Then the developer could decide on whether they could accept lower read speeds and higher seek times or whatever, and go with the best option for their game. But none of those were realistic options, the only available choice is DVD, and that's it. More games are going multiplatform than in the last generation, so developers are dealing with it. So, uh, in conclusion, nothing is needed, everything would be nice to have.
Sorry for the interruption.