Do you intend to use your 360 for anything besides playing the game in your 360?
DLC, demos, music, movies; all of these suck up space incredibly quickly (especially DLC, Dragon Age alone would push you past 4GB). Xbox Live Arcade games, about .5 GB per game. Demos, about 1 GB per game and so on...
If you ever want to do more than just play with the disc that you have in your hand, get the hard drive.