Have done that in the past for myself and I did think about doing the ext drive that way but it still works out more expensive and doesn't have the same warrenty and backup software. I can get the Seagate Freeagent for £48 which seems good to me.
Apart from the connections on the back do you think the extra 128mb onboard memory will make any differance. My dad uses a 22" lcd monitor but has the res at a lower setting so he can see it better.
He doesn't play games or anything, well apart from solitaire.
Thanks