Well, I went and bought the Sandisk Cruzer for my XBox360 as it matched nicely with the default colors (it's white with a lime LED, what more could you want!)... I guess I could have RTFM and noticed this, but who wants to read that pesky little thing ;)...

Well, needless to say, the USB adapters on the XBox360 only allow for media capabilities (Pictures, Music, Videos) and do not allow for access as a media adapter (which is needed to copy data from your XBox360, such as game saves, your gamer tag, etc).

So, a note to everyone!
USB Memory/Devices can only be used to media.
Memory Card can be used to copy your Gamer Tag, Game Saves, Screen Shots, User Videos, etc.