Of course they would deny it, it would rob them of sales if they confirmed there was a slim, cause people would wait for it.

Also I'm surprised people are saying "I don't know why MS would want a 360 slim"
A simple reason they'd want a slim, is because it would be cheaper to manufacture, cheaper ship, and shipping along with warehouses will be more efficiently used because of the smaller size, again saving them money, going slim has allot of benifits...this is why Sony went this route, and why Nintendo has a small console to begin with.

Has anyone seen the guts of a 360?
It has so much hollow spaces, spaces where hot dead air can sit in the unit causing damage.

now have you seen the PS3/PS3 slim or Wii guts?
They are tightly packed, and the only hollow places are those used by the cooling system for air flow.

Microsoft could redesign it's 360 design so that things are more tightly packed and more better designed for sufficient and efficient cooling. Not only would they fix the RROD issues, but as well creat a much smaller system that cost less to make, and this means more profit per unit sold as well as increasing the consoles life.

The advantages are clearly there, the only reason I can think of that they don't care about a redesign, is if there ready to kill the 360 off and replace it with the xbox 720, if this is indeed the case, then it's understandable that they spend that money of the new console R&D rather than the old one, but I don't think people want to be upgrading any time soon, I sure don't, it just feels too soon and not a trend I want to see happening.

We don't need one, its the most affordable current gen system on the market today. It looks great enough.