Joystiq broke the story that USB storage was coming to the Xbox 360; today, the update goes live. A quick download, and suddenly you're not dependent on Microsoft to sell you overpriced hard drives. Of course, the ability to use USB storage comes with a few limitations.

The storage device has to be over 1GB. You can only use 16GB of the storage device, no matter how large it is. You can use up to two devices at a time, giving you 32GB of storage. In other words, if you have a bunch of small USB sticks kicking around the house, you suddenly have a good reason to use them on something.

The official FAQ answers the question about why the usable space is limited, but the attitude seems to be that it's better than nothing. "Supporting USB storage devices up to 16GB in size is a huge increase in storage over any solid state memory storage solutions currently available for Xbox 360. Users that need more storage have options in the Xbox 360 hard drives, which are available for purchase separately."

While this is much better than spending $130 on a 250GB hard drive, the limitations dull our enthusiasm a bit. Microsoft couldn't just unlock the system so you can hook up a single, large USB drive? It is better than nothing at least, and it's available now.