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Most of the newer boxes don't have the red-ring issue, but you want to be careful that you are not getting a model that was fixed by a hack. Basically the unit will work for a few weeks, maybe months then die.
I know that Micro Center and Best Buy both sell refurb units for $199 that have some sort of warranty, maybe a better option than Craigslist.
Other than that, all I can say is try to get a 60gb or 120gb model. I install the games I play the most to the HDD and they do take up quite a bit of space. It helps save on wear on the disc, and I don't have to hear the disc spinning while I am playing.