Well, as you said, they aren't going to do that. Microsoft needs some kind of revenue to maintain their walled garden environment. I imagine their costs are a lot more than with Sony or Nintendo. They are much more likely to keep Live while emulating PS+ somewhat.
If they did move some online features to Silver, though, it would be a big move. I know that PSN being free was a major consideration for me choosing between the 360 and PS3. Carry-over gamers probably would still go with their favorite choice from this gen but it could certainly influence new gamers.
I also think Live made the 360 less attractive than the PS3 as a "second console" and that this accounts for a little of why the PS3 has sold at a higher rate this year when many people already have one or the other. Anyone buying a 360 just for Halo or Gears has to pay a premium on top of that, which is kind of a negative factor.
