The upcoming NXE (xbox live dashboard update) will bring with it a feature to rip the game to your hard drive and run off that. This is has been a topic of discussion with a few of my friends because there are some conflicting views. The PS3 camp is saying its great, but they are forced to "install" their games. While this makes the game run faster (eliminates some loading issues that have to be coded special), the downside is the customer is left sitting at basically a file copy screen for minutes before being able to jump into the game.
Lets get to some specifics (with the 360). The 360 has a maximum (best case scenario with a pristine disk) transfer rate of about 12 Mbps. Accessing the same data from HDD would be about 10x the speed. This makes loading the required assets much easier for the programmer. The 360 has only 384 MB of system memory, so there is alot of loading from disk/DVD. To get around this programmers have devised complex caching and prediction algorithms to be sure the user is not stalled. In some cases, companies have chose to load limited assets based on whether the user has a HDD or not, as items are cached there. Note currently no company on the 360 for a retail game loads the entire game there, just individual assets (think cache).
A recent post ( http://www.joystiq.com/2008/10/31/xbox-360-load-time-comparison-dvd-vs-hard-drive/ ) has shown the upside. Quieter system and slightly faster load times. They have shown the transfer rate to be about 1.7GB per minute (so they are seeing about 28 Mbps transfer on a file copy). For an 8GB game this would leave the user sitting (best case) slightly under 5 minutes.
I am not sure this is good thing. What I would like to see if the strategy that Games for Windows uses. This is give the user the option when the put the disk in the first time. To wait or not to wait. If they chose not to wait, load only the require level (lets say for arguments sake 1 GB of data), which would take less than a minute (show some screenshots or something in between ;) ). Then predict the next, lets say level, to be loaded and on idle cycles in the game, copy the files ( of course giving priority to the action rendering and game code if they need the resources). This a lazy loading pattern used in programming for many different types of applications.
I would hope that the hardware engineers are thinking about this for the next gen game consoles to allow the movement of assets from optical to hdd. Ultimately download games would be great, no more copy, but there are costs with this as well. HDDs would have to be much larger (hundreds of GBs or TB) and this is big cost to add to selling a console. Anyway, just my thoughts.