From Feb 2010 interview with Petey:
http://www.incgamers.com/Interviews/252/igtv-peter-molyneux-interview-/2
Moving onto Project Natal quickly, I want to talk to you about Milo and how he's going to be involved in the rest of the technological advancement. Are we going to see him spread throughout different games, are we going to be able to talk to him about maybe... coming out, and being homosexual?
PM: The frustrating thing is that I am veiled. Three and a half minute experience at E3, featuring Milo, which is a character – a single character – and it was exhibiting some of the technologies that we could do with Natal. I didn't say anything more than that, and whether that was the whole game or not, and I think you'll just have to wait and see how that fits into a much, much, much bigger and much more dramatic picture.