At the advent of the Xbox Live Arcade, Microsoft imposed strict rules regarding how big game downloads could be. If a publisher's game exceeded 50 MB of data, it couldn't be put up for sale. Later, that size limit was lifted to 150 MB. As you may have noticed, that restriction no longer exists. Shadow Complex was nearly 1GB in size while the recently released C&C 3 Commander's Challenge pack clocked in at 2GB. Have all restrictions been thrown out of the window?
The answer is more or less.
In a meeting with Microsoft's Scott Austin, director of digital games, IGN was told that 2GB is the limit now, but that isn't due to any restrictions imposed by Microsoft. The 2GB limit is a technical limitation of the system being used. Games on Demand, a section of the Xbox Live Marketplace where you can buy full retail games to download, uses a different file structure and so that limitation does not exist.
source
The answer is more or less.
In a meeting with Microsoft's Scott Austin, director of digital games, IGN was told that 2GB is the limit now, but that isn't due to any restrictions imposed by Microsoft. The 2GB limit is a technical limitation of the system being used. Games on Demand, a section of the Xbox Live Marketplace where you can buy full retail games to download, uses a different file structure and so that limitation does not exist.
source