I forgot to mention that the E3 expo is happening June 2-4. Usually price drops happen here, theres a rumor (don't hold me to it) that the PS3 will drop either 50-100$. I don't think the XBox will drop more as it is cheaper than the Wii in some places.
Since Madden doesn't come out until August, you might want the wait.
Now to answer your questions:
1. What is the difference between the different versions? Arcade is the cheapest but it is better to buy a better version.
http://i330.***BLOCKED***/albums/l406/RealityTVLounge/Differences.jpg
You will need a hard drive to store game PATCHES and UPGRADES avoid the arcade!
2. I don't have a HDTV. Will the graphics be really bad?
They will be horrible man. Get your priorities right. You might have difficulty reading font (words) in some games because your tv sucks. You will be looking at a horrible version of the game where menus are larger than they were intended to be designed as. The entire experience will be bad and when you get the HDTV you will see what you were missing out. Seriously get the TV first than the console. You will enjoy the football games more.
If you do decide for an HDTV over a console. Get something with a QAM tuner. That way you can pick up over the air channels (NBC HD, CW HD, ABC HD, CBS HD, FOX HD) right from your Coaxile in. If you do not want to get a set top box OR a premium HD package (TNT HD, FOX News HD, etc)
Heres an example of a game from a 480p TV (Standard) vs High Def 1080p
Standard:
http://i330.***BLOCKED***/albums/l406/RealityTVLounge/IMG_8976.jpg
HD TV:
http://i330.***BLOCKED***/albums/l406/RealityTVLounge/IMG_8978.jpg
Its not the best picture but you should get the idea. Jitter lines, bad blending, disgraceful really.
I also added some pictures of real TV in HD vs SD... notice the little button hes wearing.
Standard 480
http://i330.***BLOCKED***/albums/l406/RealityTVLounge/480.jpg
1080i
http://i330.***BLOCKED***/albums/l406/RealityTVLounge/1080i.jpg
Now where to buy a console or games on the cheap?
http://www.cheapassgamer.com/forums/forumdisplay.php?f=11
Its a price tracking website. People post which games/consoles are on sale right now. Eg Haze 8$ Fracture 10$ (but I don't know if these are good games - games that tanked in retail but cheap)