It's not the size that matters, it's how you use it. But size does help, of course. In case you missed last week's news, it was announced that the Xbox team will increase the file size limit of Xbox Live Arcade games to 350 MB.

In the latest Major Nelson podcast, Xbox director of product management Aaron Greenberg commented that increasing the file size limit would invite in better, and more immersive games on XBLA. He also explains why they chose to increase it in the first place:

The idea originally was that we wanted you to be able to even download an Arcade game on a memory unit, so that even that largest Arcade game would fit on a memory unit. We quickly realised that, by and large, everyone was either buying a console with a hard drive or was buying a hard drive after they bought their console.

[...] I think that opening up the door to have larger, more immersive type experiences, and allowing developers who were working within some set guidelines to expand that, will bring better games. That’s what we want, right? I think that’s what people will find.

Greenberg also hints on what's in store for Xbox Live Arcade, now that it has its own first-party studio. He's coy on the details, but he does promise that we should expect big things for XBLA, and that we should hear official announcements soon:

I can tell you that there’s a bit interest in developing original content, securing exclusives, working with top developers and creators out there to bring stuff to Xbox Live Arcade that is unique and original and the kind of things that people will want to play.

There are some very big announcements around that, coming soon. And I think the fact of that being timed with the increase in the size of Xbox Live Arcade games, should give people a bit of a hint that what you thought of as Xbox Live Arcade in the past is going to get that much better.

Speaking of big, Greenberg also states that people are now downloading around a million pieces of content daily. He remarks that when the 360 first launched, it took the service four months to get to 10 million downloads, and now they get the same amount in 10 days.