In an official response given to IGN, Microsoft had the following to say. "Microsoft, in both America and Japan, has not announced anything regarding the possibility of a next generation DVD drive being placed in the Xbox 360," read the statement. "There are currently no plans to release an Xbox 360 equipped with a next generation DVD player."
So that is a categorical no to an HD-DVD equipped Xbox 360, but we do know that Microsoft has teamed up with Toshiba to develop HD-DVD products, so I don't think we can rule out an HD-DVD drive at some point in the future of the Xbox 360.
One thing for sure is that if such a high drive was to be included in an Xbox 360, the higher capacity media would not be used for storing game data. Last month Xbox Japan's Yoshihiro Maruyama said: "If the Xbox 360 uses a next-generation DVD drive in the future, it will only be used for watching movies that run on next-generation DVDs."
This is also just common sense, as using an optional optical drive for certain games would be split the Xbox 360 user base. While some would argue that Microsoft has done that already with the optional hard drive, all 360 games must be designed to work on hard drive-less consoles. The exception to the rule appears to be MMOs.
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