If I were a guessin' man, and I am, I would suggest that Microsoft wants to add value to the platform with non-game properties like Netflix and Primetime, and target their game properties at more casual games, like Lips, Scene It, and pretty much anything Rare does. Even Fable 2 is more casual targeted than Core gamer targeted.
We've got the hardcore gamers now, we're over 10 million in the US and equalled the original XBox worldwide, what we need now are the PS2 gamers who buy DDR and Singstar, and the Wii gamers who buy... uhh... peripherals... apparently. Spending a lot of First Party money on catering to a demographic you already have, and that the third parties are doing a damn good job of satisfying just seems silly.
In the early stages of a console, specific games sell them (MGS4, Halo), in the mass market stages, the _number_ of games sells the console, in my opinion, and you can create a lot of good, more casual, titles with the same resources and budget that you would have to allocate to a single AAA core title.
Just my opinions, of course.