Ok - I'm gonna make this as clear as possible:
The Xbox comes with an min. 8gb HDD as standard. This is more than enough room to store another dashboard, XBMC, Apps etc.
The only reason you'd want a bigger HDD is to store other types of media - movies/games/etc.
May I remind you all, both of which you have to own the original to legally store them on your HDD anyway. If the guy's short on dough to buy new, then I suggest subbing his next 2 / 3 games purchases in favour of a large HDD. The cost of 2 games would easily cover the cost of a pretty good sized HDD.
Martin