Well saving games requires a memory card or harddrive, and the memory card is like $35 for 64mb, the 20gb harddrive for $99 is a much better deal.
I would probably actually mod a $100 360, you don't have much to lose. You have to rewire and flash the DVD drive to play burned games, and you have to get rips that have properly modified the image to be readable by the flashed drive. You can also use a hacked harddrive, by getting a normal 2.5" notebook drive, copying an image of the 360 drive over to it, and sticking the drive in the 360 harddrive case. There are tutorials around.
I'm not modding mine, I don't want to void the warranty, but that's because I had to pay more than $100.