Xbox – Can you legitimately install Xbox 360 disc based games on a 16 GB flash drive

One of the benefits would be that your disc will get less wear and tear. You still need to put the disc in, but after verifying it, it shouldn't be read again (though that will depend on the game). This should minimize the danger of scratching it if the console gets knocked. There should also be less noise as it doesn't need to keep the optical disk spinning.

You might also get faster loading times - but that would depend on the game.

An obvious downside is that you are going to fill your hard drive if you do this for all your games.

I am sorry to be the bearer of bad news (3ish years late) but only certain models of Xbox 360 allow backwards compatibility with Xbox Original games. I believe the newer slim black ones and certain Arcade Edition Xbox 360's will allow for backwards compatibility. You might have one of the Xbox 360's that did not come with a HDD (Hard Disc Drive) and therefore cannot take advantage of backwards compatibility. (See List of Xbox 360 retail configurations) I hope this helps!