Main reason for disallowing HUD on the PS3 was that with the update they've introduced planes at a large distance showing as fat black dots in the sky, which would change into the rendered airplanes at a certain distance. So it's kind of a visiblity enhancer. Second reason for disallowing it was to get people to learn and read the cockpit instruments.
Not sure about the first point on the X360 though.
MAC
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