I am in the same exact boat. I have a 20GB and I was looking at the upgrade, then I saw the price and said no.
I install one disk at a time. Once it prompts you for disk 2, you can uninstall the disc 1 and you will be set with disk 2 until you jump the Omega 4 relay. Once you jump, it will prompt you for disk 1 again.
The load times are slightly faster, and I like installing it for the noise reduction of the 360. I have not frozen up once. The only time I had to restart was when I magically started climbing on a rock, I proceeded to float and was getting shot at the same time with no enemies around.

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