As XBox Live brings on more services and the XBox dashboard undergoes more updates adding more functionality, the 20Gb drive of the original 360 Pro seems woefully inadequate (in fact, to be honest, 120Gb occasionally feels a little restrictive these days). As such, this upgrade seems to be a neccesssary evil. Unlike the PS3, the 360 uses a proprietary hard drive (well actually a pretty standard hard drive in a custom case), which means that you can only use the 'Official' products. It doesn't matter whether this is good value for money then, as there aren't any other choices - it's a matter of buy this or don't buy this.
If you fall into the group of people that consider that they need to buy this, then go for it. It's a great product. It does exactly what it sets out to do - not only that, but Microsoft handle the data transfer process well too by providing the data transfer kit. The transfer kit will leave your previous drive blank though (I'm not sure that there are any ways around this, so if you want to backup your saves, you'll need to find an alternative method).