5400 vs 7200. You're not really going to notice the speed difference. However you might notice the increased heat and ambient noise.
2mb vs 8mb - The only thing the larger cache is good for is when moving large files. Doubt you'd notice.
Drives. Check the pinned thread up top for lockability and references. I personally prefer seagates for xbox type applications. Usually quieter and run cooler. They were out of stock when i bought mine, so i ended up buying the maxtor =/ Get it narrowed down to a few you want, then look deals at places like dealnews.com and fatwallet.com. If there's a 150gig for only a few bucks more than the 120, and of a decent quality, get it. You may lose some of the total storage, but the leftover after the 120 is good for about, say, 6 games.