There will be two different 360's: The core 360 ($299 USD) and a fully loaded 360 ($399 USD). The North American launch date is November 22, 2005
Core: Includes console, wired controller, and composite AV cable.
Fully loaded: Premium chrome console, wireless controller, hard drive, Live headset, component HD AV cable, and ethernet cable.
It will be backwards compatible with some games.
List of compatible games->
http://www.xbox.com/en-us/games/backwardcompatibilitygameslist.htm
From Bungie (the guys who made Halo & Halo2):
"You need an Xbox 360, an Xbox 360 hard disk drive, and a copy of the original Xbox game. None of the backward compatibility or improvements will function without a Hard Drive."
Soooo....from all of the info I've read you need a 360 w/HD to play the old games. Of the two systems available only the fully loaded one ($399) has a HD included. If you were to buy the core system you would have to buy a HD separate. The separate cost of the HD is $99 USD so it would a stupid idea to buy the core system if you wanted to play the old games.