^ I would agree that you need to manage your drive space better when you have less space to work with. This is why I sprung for the 240GB drive, it was on sale and even so a little more, but I was glad I did. However, it all depends on your intentions. For someone that doesn't have a ton of apps or games 120GB should be fine. You can also do some OS tweaking to get ride of your windows recovery, which consumes space. You should also consider manually setting your page file to something very small, like 1GB, and reducing application cache sizes for IE or Firefox. You can also set Firefox to use RAM as a cache instead of disk. There are a lot of individuals who are doing just as you mentioned with installing the OS and some apps on the root drive and games on another HDD. It is all personal preference and how you manage your system. Personally, since I use STEAM for most games I can back them up to a file on my HDD and uninstall them. If I want to go back and play an old game I can just restore for that file.
I still think SSDs are a good component to consider as it adds to your total system experience, however, you are correct in that it does not add any gaming performance. So it is the judgement of the system owner. I do think anyone who has an SSD should also have another HDD for just data and for items that consume a lot of space. Actually, I have always recommended keeping your data on a completely separate drive than the OS and Apps simply because it is "safer". Your OS/app drive is much more likely to crap out on you or become corrupt as it is written to much more than a data drive usually is. It also makes reinstall much easier because you don't have to move data off of it. It makes backup easier to since you can just back up the entire drive to an external device and do not have to worry about OS or App files.