Flash drives with good speed are not cheap. All those amazing prices you see with 16GB drives, 8GB drives, etc. are usually the slowest drives around and slow drives perform horribly, especially on writes.
And people's experiences with flash drives are usually with small files like documents and images so they don't realize how slow their drives really are. Try regularly copying big ISOs that are 4GB+ to normal flash drives and you go crazy.
So if you're going to buy fast flash drives, you're losing the price disparity between flash and the hard drive.
I have both a Jasper Elite and a Jasper arcade so I feel very safe about them lasting a normal lifetime. But once you get used to installing games on the hard drive, it's hard to go back to running games from DVD.
But if you're fine with running games off the DVD, the arcade is perfectly good. There's plenty of onboard storage for most things. But as the Xbox dash gets more complex, you'll start to have to depend on more memory. The Kinect dash requires 197 MB of storage space. so that 512 MB doesn't look so hot on the arcade. MS put 4 GB on the new arcade-S to give more breathing room.