Next time you sign into Xbox Live you should be prompted to update, this update will add the flash drive support for the Xbox 360. Major Nelson revealed this earlier on his blog.
“Sometime over the next few hours when you sign in to Xbox LIVE you’ll receive a prompt to accept this mandatory update. If you are signed into LIVE already, you may be signed out and asked to accept the update and you’ll be back online in a few moments,” said Nelson.
Microsoft has teamed up with Sandisk to create official Xbox 360 flash drives with 8gb and 16gb models. The official drives will however cost $40 and $70 dollars, proving very pricey for that sort of thing.