Xbox 360 (Xbox 360)XBLA Game Limit Upped to 350 MB
Kotaku - May 20, 2008
Larger file sizes have previously been granted in only a few select cases, but no more. The Xbox 360 game download file size limit has been upped to 350 MB. David Edery, portfolio planner for XBLA, mentions that this change is "steady progress," so expect to see more updates in the future.