After seeing this thread, and this thread from the other day:
http://www.neogaf.com/forum/showthread.php?t=481827&page=5 here are my thoughts...
DVR's are not the way of the future, and I'm not sure why so much attention is being put on them. I've already seen patents where some television providers are patenting DVR service over the cloud. Instead of having a DVR with a hard drive, your DVR will be about the size of a Roku or AppleTV, and your tv shows are recorded on the cloud for playback later. DVR services are set to become, essentially, very similar to Netflix or Hulu. Apple, Electronic Arts, even Microsoft want to get rid of the need for huge hard drives and physical media. Perhaps the death of DVR service and traditional cable tv is too far out for Microsoft to worry about the cloud at this point in time... But with Hulu and Netflix...the market has *already* started moving that way. Eventually, everything will be sent over the internet, and only those who want to back up their files locally will pay for extra local storage.
Anyway, such an emphasis on DVR service seems like MS is meeting the current market demand rather than looking much toward the future, although I'm sure the 720 could be updated to operate with cloud services. No doubt, this approach might be good for sales as it would let the xbox do basically anything a home dvr/blu-ray/roku setup could do.
Another problem though is that cable tv and satellite services do not generally "play ball" very easily with secondary hardware manufacturers. It's just not something that, traditionally, they've embraced with any enthusiasm.
What did interest me is that Microsoft (I think), patented a system for recording gameplay footage on a console. So, apparently, you can record all your gameplay on your xbox and (hopefully) edit it and upload it to youtube. If I remember correctly, they've already got a patent for something similar to this.
Last, I'm not sure that Microsoft wants to bundle in the cost of a huge hard drive at launch, which is what would be required for DVR services. So, I see a 3 skus. Media streaming unit only (DVR capable, but harddrive sold separately). gaming and media streaming unit (no harddrive, but sold separately) and premium model gaming, media streaming, and DVR services with a hard drive build in.
The basic console will have some flash memory built in, but I can see MS planning to screw everybody on proprietary aftermarket hard drive prices.
Anyway, I find it puzzling that Microsoft would go through the trouble to include a bunch of DVR functionality with specialized hardware when such technology is on its way out.
I'm not too worried about the DVR taking up system resources. I don't see why it should take up much more than the current 360 OS already does when games are playing.