I agree that the nand chip is used to store the dash, but I dont believe MS would store the bios on the chip with the dash... too easy for them... the nand chip(if the 360 is designed correctly) is NOT a cache... the reason being... NAND chips have a limited number write/rewrite cycles so they are not used as a ram. also if "caching" a value... it would be on a ram chip since NAND has a very slow reaction time compared to ram. If they were storing a value, it's logical if it's a rarely changed variable (dashboard settings). lol, at least we know for SURE that the dash isnt on the HD.
all of the above said, I believe that it starts its bios and runs self checks(unsure of what), then if everything is OK then it retrieves the dash from the NAND chip. Also, if the original dash was ~14 mb, and they "had" to cut it to 4, then there is something else on the chip or else they would not be worried about 10 more megabytes. even if the dash was 14mb, that leaves a total of 114mb of expansion room. why would MS want THAT much expansion room? They either have plans for some MAJOR software upgrade(but why would the cut the first dash down so drastically?), or their is something else stored on the chip.