USB Mass Storage Device Support on Xbox 360 is due in a firmware update this Spring if documents seen by Joystiq are anything to go on.Apparently support will be for a minimum level of 1Gb to a maximum of 16Gb, "The system partition occupies 512 MB of space, and by default the consumer partition occupies the remainder of the device capacity, or 16 GB, whichever is smaller," says the report.
Source:
Joystiq