Personally I have never used them. I don't have much reason. Yes, my hd is small (I got my 360 in 2006 and never upgraded) but usually I'm only playing a couple games at a time, and if I decide to go back I usually start from scratch. Combined with the fact that your purchase history is stored on Xbox Live (meaning I can easily redownload old Arcade titles) and I almost have no reason to use it.
So what about you?