Makes sense to me.
If this to remain a 360 addon vs a nextgen controller then its costs must be as low as possible to a huge number of existing customers purchase it. With a game included, I would expect this to be $100 at a maximum. That game must also have the kind of pull that Wii Sports or Wii Fit have. This doesn't mean it needs to be a *casual* game, just have that kind of unique must have appeal to it.
However, this does mean that games like Gears2 won't be doable, assuming these latest games do push the hardware to the limits as devs have stated. Something else will have to be scaled back to allow for the cpu to do both tasks appropriately.
This will be an interesting year to see what MS and Sony finally put out in the motion sphere. E3 is going to be EXCITING!