Trying to save a buck with a smaller HD would be a bad idea. The 500GB/platter drives offer the best possible performance. Smaller drives are considerably slower due to lower data density. They also hardly save any money at all. The build is already under budget, why slow it down with a slow drive?
Ehh, I doubt he'd notice a difference if he went with a smaller drive. Hard-drive performance is so...small of an impact on gaming its not worth getting worked up about. Not taking SSDs into consideration.
I would however recommend against getting a smaller drive because 500GB is a "safe" amount to have if you consider apps, games and media stuff always get bigger and bigger every year. Five years ago I thought I'd be fine getting a 80GB hard-drive, now I have a 1.5TB HD plus a 640GB portable one.
If you want to save money but not sacrifice quality swap in this combo