I was in JBHiFi and the answer he gave was that if I wanted to play more than a couple of games at the same time to get the 500. So how many game saves would the 12GB version hold? We are a very casual game user - my daughter plays the most, usually stuff like Sims etc.
Price was around $279 for the 12GB and $499 for the 500GB but there was other differences with the packages that I can't remember like I think the 500GB had two controllers.
The guy also said I could update the HDD at a later stage.