Well the point would be demos, movie trailers, microtransactions, downloadable content (maps, levels, weapons, characters), and the added versatility a large storage medium gives you for online games, MMOs, and other unique games (like a Mario paint). On the technical side it allows data caching to improve load times. And from a practical point of view it could allow some video recording (not sure if this is a native Xbox 360 feature although Allard did show a recorded NFL show... either way the PS3 is not a game console but a entertainment media device so including some PVR out of the box would add a forte to this point). And considering the number of people who watch TV/record STV vs. the number of people who have HD TVs, it is easy to see that a recording feature to a HDD would appeal to more customers. And as a customer it saves me from shelling out $20-$30 at launch for a small memory card. As online become more and more relevant to the consoles a HDD will be used more often. And while HD TV is the future, Broadband is the present. Broadband connections world wide are expected to break 215M this year (about 40M in the US... both totals crush HD TV sales). Unlike the Xbox, Xbox 360 ships with live AND many of the features will be FREE to everyone. i.e. The install base of Live will go up significant from Day 1 and therefore the HDD will find itself used even more. This is even more true in that MS has a lot more exclusive support this time around. Ports are not going away, but one of the biggest strengths of the Xbox was that it had superior ports. But since neither the PS2 or GCN had any relevant mass storage support this feature was not used by ports. While that will probably again be true, MS has established itself in the market and will get more direct developer support, which in turn will mean more developers use the HDD.
On the reverse, not including the device standard, guarantees it will be a catch 22: Developers wont fully utilize it because not only PS3 owners have a HDD, and consumers wont all jump on the HDD band wagon because developers under utlize the device. The PS2 is a perfect example of this. It was so underutilized that Sony even removed the HDD slot. But as a gamer, who buys game consoles primarily for gaming functions, media options that do not directly compliment gaming are a waste for me and many consumers.
And while a 20GB HDD wont meet every persons TV recording needs, it is enough for the primary uses of the device. And for those who need bigger HDD they can easily upgrade.