From an article at:
It was put to Allard that Saint’s Row developer Volition had expressed difficulty in realising some of its ambitions for the project since the removal of the hard drive from the equation (citing issues with streaming and caching), to which he responded: “Sometimes doing the right thing means doing the hard thing. Are there developers who are disappointed? Yeah, sure. I wish there was a hard drive and I wish there were four terabytes of memory; I wish it were free to consumers and I wish we could put one in every TV set – there are a lot of wishes that I have but at the end of the day we’re trying to run a business, and you have to make those trade-offs.
AND I WISH YOU COULD MAKE SOME GAMES I GIVE A SHIT ABOUT!
Those other wishlist things weren't really practical. Putting in a hard drive (or even a ZIP drive for crap's sake) was something they could have very well done. Even if it was just 5GB, upgradeable to bigger sizes later.
Have you seen the new Ridge Racer 6 shots on the 3shitty? Ugh. Looks like RRV, the LAUNCH game for PS2. M$ is teh roxorz indeed.