Pros and cons have been covered in the past but it comes down to hardware for the most part:
Both softmod and hardmod will play all the same games and homebrew just as well as each other and I would argue both are just as stable once you get them running and getting both running is trivial and provided you can/do read very hard to mess up.
Hardmods can use any drive as noted while softmods will need a lockable drive and for it to be locked (you already have the list, locking is a part of the IDE/pata spec but one that is rarely used so not everyone implements it).
The rise of network attached storage lessens this considerably though (XBMC has some amazing streaming abilities although a rock solid SMB share support (windows and anything that has a port of SAMBA) is usually enough for people).
The secondary part is that you can change the BIOS properly which means you can change the startup (the softmod launches quite late in the boot sequence hence your needing to observe those few restrictions like hard drives). I would argue this is cosmetic for the most part, it really all boils down to swapping hard drives which is entirely possible on both but you will just have to check on that list beforehand if you want to swap the drive on a softmod.
I forgot to mention this before (crono999 mentioned it in passing) but for a pre 1.6 xbox (not sure what model the blue one will be but I would be happy calling pre 1.6) you also have the option of a TSOP flash http://www.xbox-linux.org/wiki/TSOP_flashing_HOWTO , it is a halfway house between softmod and hardmod with the ease/benefits of both for the most part (you are replacing the BIOS like a chip but without the need to fiddle with major soldering like you do with a chip, solderless are OK in my opinion but we are now several years out of the hacking the xbox era so things can get a bit harder to get ahold of).
Re: USB, anything that connects to the 360 controller port (it is USB in a tweaked form factor) can be used. You can stick it right up in the memory socket too if you want or you can even replace a controller socket with a USB port.
Both softmod and hardmod will play all the same games and homebrew just as well as each other and I would argue both are just as stable once you get them running and getting both running is trivial and provided you can/do read very hard to mess up.
Hardmods can use any drive as noted while softmods will need a lockable drive and for it to be locked (you already have the list, locking is a part of the IDE/pata spec but one that is rarely used so not everyone implements it).
The rise of network attached storage lessens this considerably though (XBMC has some amazing streaming abilities although a rock solid SMB share support (windows and anything that has a port of SAMBA) is usually enough for people).
The secondary part is that you can change the BIOS properly which means you can change the startup (the softmod launches quite late in the boot sequence hence your needing to observe those few restrictions like hard drives). I would argue this is cosmetic for the most part, it really all boils down to swapping hard drives which is entirely possible on both but you will just have to check on that list beforehand if you want to swap the drive on a softmod.
I forgot to mention this before (crono999 mentioned it in passing) but for a pre 1.6 xbox (not sure what model the blue one will be but I would be happy calling pre 1.6) you also have the option of a TSOP flash http://www.xbox-linux.org/wiki/TSOP_flashing_HOWTO , it is a halfway house between softmod and hardmod with the ease/benefits of both for the most part (you are replacing the BIOS like a chip but without the need to fiddle with major soldering like you do with a chip, solderless are OK in my opinion but we are now several years out of the hacking the xbox era so things can get a bit harder to get ahold of).
Re: USB, anything that connects to the 360 controller port (it is USB in a tweaked form factor) can be used. You can stick it right up in the memory socket too if you want or you can even replace a controller socket with a USB port.
