IGN got their hands on the new hard drive transfer kit that comes with the also-new 120GB HDD and they've written up a nice post with the details of the transfer process. It isn't pretty: the software deletes everything off your old drive, can mix up some of your media licenses, warns you that it might accidentally delete some of your stuff (and that Microsoft can't be held responsible for said deletions), and then accidentally deletes some of your stuff.
It's also worth noting that the cable isn't included in the new Elite package — it's only comes with the individual HDD. Microsoft will, however, mail you a cable for free if you buy the Elite and need one.