Originally Posted by darklordjames
While 30GB spread across two USB drives is a reasonable amount of space, you still don't get all of the hard drive advantages of the full caching system and space for things like Reach or Crackdown co-op or Burnout Paradise multiplayer (if memory serves).
In other words, a 360 with a hard drive is still the only way to have a fully functional 360.
As for DVD install, you can still use USB flash storage to install the entire DVD disc just like having a hard drive. The performance depends on the USB flash stick. If you use the high speed flash, then it can be closer to hard drive performance.
By the time you spent on buying high speed USB flash sticks, it could be cheaper to get a 20GB X360 hard drive. My suggestion is get a cheap pre-owned 20GB X360 hard drive and use a cheaper USB flash stick as extra storage if needed. Also an advantage of having a X360 hard drive is it adds backwards compatibility for many Xbox1 games.
This is how I setup the storage on my old 20GB X360. I only use the 20GB hard drive for Gamertag, NXE, saved games, game patches and in-game caching. The hard drive still has about 9-10GB of free space. That is enough to install 1-2 DVD games that I play more often to the hard drive for faster game loading. As for DLC, demo, video or anything else, I store them on an USB flash storage.