Seems to me like all they need to do is use the regular 360 controller and Natal. For the majority of Wii-style motion games, Natal is all you'd need. Games that are played with the analog nunchuck attachment such as platformers, shooters, etc, usually do not use much motion controls at all (mostly an afterthought for those game types) so a standard controller will always be a better choice for those games.
With Natal, if they want to add a few gesture controls into one of those games like Sony tries with the SixAxis and Nintendo does with games like Zelda and SMG, they can use Natal to track your movements while using the controller (such as a throwing/swiping motion with the controller still in hand).
And what's to say they won't advance the technology even more by the next Xbox so that there will be absolutely no need for a controller at all in any games? I sure don't see it happening, don't get me wrong, but it is still a possibility and it is, I believe, the next big step that all 3 companies will be shooting for. They will want to make things more "virtual/lifelike" and immersive by using our own bodies for everything. I can't wait for the day that I just buy some "direct to brain" interface where it literally is controlled by whatever you want and you have everything including sights, smells, other senses uploaded into your brain via Matrix style (without the painful looking needle jacks).
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