2GB is size limit for XBLA, says Microsoft
After noting that C&C 3' Commander's Challenge pack weighed in at a whopping 2GB, IGN asked Microsoft about Xbox Live Arcade games' recent growth spurt.
The Xbox creator responded by saying that 2GB is the "technical limit" of the current system behind XBLA games. Conversely, the Games on Demand section of Xbox Live uses a different system, so it can handle bigger files.
So now you know.