I think the only difference is the size of storage, dark_lord, but I'm not positive. I know that at the very least, there is the 20GB model and the 120GB model. There are also memory cards you can buy, if you don't want to invest in a harddrive at all.
They're handy for things like downloadable games, maps, demos, patches, videos, music, etc., etc. I have a 120GB model, and that's the one I'd recommend. You'd be surprised how quickly 20GB gets sucked up, although if you have no interest in any of other features, and plan on only using it for saved games, you can get by with 20GB without a problem, I'd say.
Xbox live gold is officially $7.99 per month, or $49.99 per year. If you shop around on the internet, though, you can find it for less than that.