The arcade doesn't have a hard drive, which is the main difference. I've heard that it's not worth getting the Arcade as you're basically guaranteed to need a hard drive sooner or later so you may as well just get a 20GB premium for $20 extra.
The
wiki page also seems to suggest the Arcade does not support HD resolutions, but my guess is this can be remedied through a replacement cable (though the component cables cost about £30 -not sure how many dollars- so again it makes sense just to get a premium and have it included in the package).
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