Brad said this:
"First, developers were having a harder than expected time creating next-generation games that spanned across two systems with various specs. As you might expect, developers were putting a focus on making games that would run well on the lower-end device first and then scaling them up to the higher-speced, Anaconda.
Keep in mind, it's easier to scale up than it is to scale down. Because of this, next-gen Xbox games would be at performance and visual disadvantage which is not what Microsoft would like to see as it starts to go head-to-head with the next generation PlayStation".
Such a bad idea, no wonder they canned it.