Well...I thought M$ had been working on this title for a while, so it's kinda hard to say it's in response to LBP.

http://www.xbox.com/en-US/community/news/2009/0107-kodu.htm

"Originally designed by Microsoft Research as a learning tool for young kids, Kodu is the newest game to keep minds of all ages sharp by developing logic, problem-solving and creative thinking skills. In fact, in 2006, Microsoft Research teamed up with Girls Inc. and the University of Santa Barbara to create an after-school Kodu program to accurately measure the influence educational games have in the fields of math, science, and comprehension."

It's developed in XNA and was probably never planned to actually be released as a product. It was a proof of concept spawned from an idea of teaching children how to program visually. It's going to be released as a Community Game with no publisher, and could cost as low as 800 points. I'm pretty sure 800 points is the limit you can charge for a community game. I would not