I bought a refurbished one from my closest GameStop (120GB). I know the manager there, and he really goes the extra mile to test them. So for me, I had little worry in buying one from them. Also, I kept the receipt, and should anything happen, it's a walk to the store to get it replaced. Having said that, always consider the source of the hard drive. If it's a chain or website that you have experience and confidence in, then you have no need to worry. However, there are plenty of sites with little to no history that wouldn't see a penny from me, until they work their reputations up. The "fly by night" retail sites are still out there, and believe me, it's a nightmare to get your money back when receiving "less than advertised" merchandise.
As for deals...you do realize the price cut from E³ along with the deals Amazon, Target and Wal-Mart had for the Arcade has pretty much killed any chances of a bargain on a hard drive. Even 20 and 60GB are still outrageously priced. Believe me, I still check for my friends who also got an Arcade. If I am wrong, then by all means, someone link it for us.
I love factory sealed condition as much as the next gamer, but we're in tough economic times. Get it used/refurbished from a trusted source. Otherwise, spring for a new one. It almost seems wiser to make your own using a laptop SATA drive and a 360 hard drive shell kit, but that raises more questions.
