When I started to use the 256MB memory units for the Xbox 360 I noticed something odd.  When I plugged the unit into my Xbox 360 it said there was only 60MB of space free on the memory unit.  My first thought was that the MU is probably packed with a bunch of useless junk I would need to delete off of the device. 

After poking around I realized that was not the case.  The device said 256MB on the casing but looked to only contain 64MB of space.  Now I had already copied an alternate profile and had several game saves on the memory unit.  I really didn't want to have to call Microsoft because I'd have to send the device in and potentially lose all the stored information.  Luckily I have a hard drive for my 360 so I was able to copy all the data onto the hard drive.

Now that the data was off the memory unit I decided to format the device just to make sure it was really only 64MB.  Well surprise, surprise re-formatting the device brought the MU to over 230MB free.  I copied everything back onto my memory unit and was good as new. 

Now I'm lucky because I have a hard drive to copy my game saves and profile.  What about all those people buying the Arcade Xbox 360, that contains the 256MB MU, and they start using the device not knowing to reformat the MU before use.  Hopefully this was just one case of bad quality control but considering it's the Xbox 360 I would not hold my breath.  Goes to show that cheap labor is not always good labor.