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drpunk said:
Forward compatibility is the key.

If Microsoft can get this sorted, get the developers working it into their games, then it basically means that a new console would not kill off an old console.

Well, it could be done, but it would restrict quite much what you could do with new version of console. For example 256MB ram vs 1024MB+ ram. Of course you could tailor game to work on both systems with some nice addons(like better resolution/gfx etc.) on new console, but that would need larger medium... or procedural methods for content creation.

Anyway, Halo 3 is already rumored to be in development for X720(As you know, or don't know. :) ).

http://blog.mlive.com/xbutton/2008/08/halo_4_rumoured_as_xbox_720_la.html

@Spankey

If they just brought out a new and improved edition rather an entirely new generation like say the X720 it would be better.

Thats quite much what I ment. It would be just like original X360, but with more mem and better GPU.