The increase in density alone from a 20GB to 120 would help increase load times. The data on the discs is closer together.
I just can't see paying over $100 for only 120GB.
(2.5" 320GB: $90
Newegg.com - Western Digital Scorpio WD3200BEVT 320GB 5400 RPM 8MB Cache SATA 3.0Gb/s Notebook Hard Drive - Laptop Hard Drives)
This is one hardware accessory MS should take a hit on in order to make these custom drives more affordable for peeps who would like to upgrade. After I install my 'currently playing' game, I will have ZERO space on my drive. Some aren't even lucky enough to have space to install a game.