This really depends on where Microsoft feels they are compared to the competition...
If they are in what they feel is a good position, then they will wait as long as possible. Simply because it is more profitable and would be a really great marketing tool to say the 360 lasted as long or outlasted the bragged about 10 year life cycle of the PS3. Let's face it, their software sales are strong, third party support is strong, Marketplace is strong, etc. The only thing not exceptional is console sales.
Microsoft still has a lot of options this generation... Loads of AAA games (just like PS3), natal, a slim option, price options, bundling (Sky TV, Live Gold, etc.), etc. I would think they would exhaust their options before moving on.