I don't believe this 'Xbox 360 Turbo' will be a true successor to Xbox 360 (the Xbox3 will be far more powerful and is a few more years away) but more like an upgrade. The question is, how much of an upgrade. Probably something like DS to DSi, GameBoy to GameBoy Color, GameCube to Wii, TurboGrafx-16 to SuperGrafx, etc. So probably not something like a generational leap like GameBoy to GBA, or Genesis 32X. That 32X upgrade was something that was actually a very large leap over Genesis (40 times on paper) even though developers didn't push it very hard and it failed. I'm expecting Xbox 360 Turbo to be 2 ~ 4 times more powerful than Xbox 360 overall. A decent upgrade that developers will really love.
Now with this upgraded 360 coming in a little over 1 year, the next-gen Xbox3 is probably going to be a little farther away, like 2012 or 2013. Maybe not even until 2015 if Microsoft sticks to what they said this last week.
Xbox 360 Turbo might be the way that Microsoft can keep this generation going another 5 years (in 2010 Xbox 360 will be 5 years old). Or I could be entirely wrong.