1UP reports that not only could Natal become a standard add-on for the 360, but also speculates it will evolve to become the next generation Xbox.
On the other hand, there is also talk that the new console might only be a minor upgrade to the current 360 hardware, with publishers having to support both the new model as well as the current system. All existing Xbox 360 games could be played, but future games would take advantage of the rumoured upgrade. Games would look or perform better on the advanced Xbox, but it may not be a generational leap like that of the original Xbox to the 360.
From what we can gather at this moment, it sounds similar to how Nintendo relaunched the DSi, evolving older technology into something new. With Microsoft’s Shane Kim reinforcing the company's commitment to a long life-cycle for the 360, perhaps Natal will be more than a simple add-on.
1UP says its sources point to next year's Game Developer's Conference as the announcement date, so for now we will have to wait to see if further information is revealed to strengthen the rumour.

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