They've made it very simple to put your own larger capacity 2.5" Serial ATA drive in- they even give how-to instructions in the quick reference guide. Simple matter of removing a screw and gently pull the thing out, replace the drive in the mount and reinsert. the drive will format automatically when you start the system up again. You can use any brand you prefer.
The main decider for which version to get should be if you plan on going online wirelessly or through ethernet cable attached to your router. I'm doing the latter so i went with the 20 GB model- had no immediate use for the memory card slots under the flap either. No sense paying out extra for stuff that won't be used.