EB Games - Xbox 360 Arcade & Forza 3 & Banjo Kazooie - $297
If you ask in store you should be able to trade the two games in on the spot. Forza's worth about $65 & Banjo about $20 or so.
I'd reccommend keeping banjo though, it's a good game.
*Note that the arcade system only has 256MB of internal memory.
You can get Xbox360 memory cards or an external X360 20GB HDD.