Xbox spokesperson Major Nelson confirmed the rumors. Starting on April 6, Xbox 360 owners will be able to use USB flash drives and maybe USB hard drives for storage.
You can use up to 16GB per device and plug in two USB devices in (flash drives or possibly hard drives) for a maximum of 32GB. Major Nelson “highly recommends” flash memory over spinning hard drives. Drives need to be formatted and configured before they are Xbox 360 compatible.
SanDisk and Microsoft have plans to release an Xbox 360 branded flash drive in May that’s pre-configured out of the box. Pricing has not been announced.