"We are constantly updating the console's more than 1700 internal components. We can confirm that we are moving to internal memory for the Xbox 360 Arcade. The physical internal memory is the same size as the previous external memory units -- 256MB."
While vague, the statement seems to imply that Arcade systems will no longer ship with external Memory Units, as reported by at least one Jasper hunter. Assuming this is the case, the Arcade SKU is now equipped to handle various memory-required functions like game saves and NXE (128MB) without the use of an external memory device. Of course, this also means the advantages of the once-bundled Memory Unit must be sought at an extra cost. Microsoft has not confirmed the installation of internal memory for other Xbox 360 SKUs nor has it confessed to outfitting its consoles with the Jasper chipset. (Don't hold your breath for that one.)