Arcade vs. Pro vs. Elite
The Xbox 360 is available in several different packages. An "Arcade" system that includes the system, a wireless controller, and a 256MB memory unit. A "Pro" system that includes the system, a wireless controller, and a 60GB hard drive. And an "Elite" system that includes the system, wireless controller, and a 120GB hard drive in a special black case instead of the white case the Arcade and Pro come in. You will find specific details on the three systems at the following links: Xbox 360 Arcade System ($199.99) FAQ and Xbox 360 Pro System ($299.99) FAQ and Xbox 360 Elite System ($399.99).
The Arcade system seems like a good starter system since it comes with a memory card, but you'll end up needing more space in a hurry so it is highly recommended that you go with the Pro or Elite.
Compare prices for the Xbox 360 Pro system at PriceGrabber
HDTV and Broadband
Before you decide to buy an Xbox 360, there are a couple of things to consider. To really take advantage of everything the system offers, it is highly recommended that you play on an HDTV and also that you have Xbox Live, which requires broadband internet.
HDTV: Xbox 360 games look just fine on a standard television, but to really get the full impact of next-generation graphics, an HDTV is strongly recommended. Prices for these TVs will continue to get more and more affordable and if you are looking to buy a new TV anyway, an HDTV is the way to go. If you are planning on seriously playing your Xbox 360, PS3, or next-gen DVD technology, you need an HDTV. For full information on HDTV and TVs in general, please visit About.coms TV and Video Site.
Broadband Internet: Online gaming and connecting with your friends is a major part of the Xbox 360 experience. All games offer a fully-featured single-player experience, but to really utilize everything the Xbox 360 has to offer you need to sign up for Microsofts Xbox Live service, and that requires broadband internet. You can learn all about broadband internet as well as find service in your area at DSL Reports.com.
HDTV and Broadband are not required, but they will absolutely make your experience with the Xbox 360 better.
Xbox Live
As far as Xbox Live goes, there are two versions Silver (free) which lets you chat with friends and download items from the marketplace and Gold ($50 per year) which lets you play online multiplayer games as well as chat and download.
With Xbox Live, you also have access to the Xbox Live Marketplace where you can download new Xbox 360 Game Demos or buy specially made Xbox Live Arcade Games. The currency you use on the Xbox Live Marketplace is known as Microsoft Points which you can buy in retail stores or through your Xbox 360 with a credit card.
Controllers and Accessories
Extra controller and accessories are a must if you intend to play with other people, and you have a lot of options in this area. You can buy wired or wireless Microsoft brand controllers for $40 and $50 respectively or you can buy third-party controllers from MadCatz and Pelican for considerably less.
For racing games, the Official Xbox 360 Wireless Racing Wheel is the way to go.
For fighting games and other arcade-style games that require a bit more precision than the standard Xbox 360 controller is capable of, the Hori EX2 Arcade Stick is recommended.
Other, more general accessories that you might consider include the Pelican System Selector Pro for switching between multiple game systems, and the Turtle Beach Ear Force X4 Wireless Headphones so you can play it loud without annoying your neighbors.
One set of accessories I do not recommend are the various cooling fans from Nyko and Pelican. They are loud and somewhat poorly constructed (so they break surprisingly easy) and I'm not really convinced they make all that much of a difference in extending the life of your system.

