Microsoft will upgrade its disc technology for its next Xbox from DVDs to Blu-Ray discs, catching up to rival Sony, games industry sources tell Kotaku.
Microsoft intends to incorporate some sort of anti-used game system as part of their so-called Xbox 720. Which might indicate that players can only fully enjoy their games from a fresh, out-of-the-box copy. Similar to the Playstation Orbis features. Obvious approaches—I'm theorizing here—like linking a copy of a game to a specific Xbox Live account could seemingly be foiled by used-game owners who would keep their system offline.

One source familiar with Microsoft's plans for the new Xbox said Microsoft plans to ship their new Xbox with a new version of its red-hot Kinect hands-free sensor system. The new Kinect would contain an on-board processor, a feature originally intended for the first Kinect. That processor would enable a new Kinect to more effectively detect users' motions.
I'm also hearing that Microsoft is interested in making a smaller controller for its new console.

Apparently, one thing Redmond has been whispering about is the fact that the new console won't have a disk drive.

MCV claims to have been told that Microsoft has been telling partners that the newest addition to the Xbox line won't have an optical drive. Though a disk srive is out, it's though the console will offer compatibility "with some sort of interchangeable solid-state card storage," but it's not clear if this means MicroSD or something proprietary. Additionally, MCV reports that a 2013 launch date has been confirmed.

An accidental tweet which has now been removed, confirming the Durango by Crytek's  Technical Designer

In real terms, the Xbox 720's raw graphics processing power is expected to be six times that of the Xbox 360 and will yield 20-percent greater performance than Nintendo's forthcoming console, the Wii U.
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The Xbox 720, codenamed Durango, will purportedly be the first Microsoft console to come with Blu-ray drive. It will also require an always-on internet connection for anti-piracy measures and sport two graphics processing units.

The Xbox 720, according to the report, will pack a "monster" 16-core IBM PowerPC CPU along with a GPU equivalent to AMD's Randeon HD 7000-series graphic cards and a Blu-ray drive.

Meanwhile another report, by VG247, has emerged revealing details Microsoft has made available to certain partners. Apparently, the console will have two GPUs. The structures of the GPUs will not be as they normally are in PCs, where the two chips take turns to draw lines of the same objects. Instead, the Xbox 720 chips will, it is belived, be able to work independently, drawing different items simultaneously. 

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Bloomberg reports that the next Xbox won’t be launching until 2013, but will launch in the same year.
*New* Gaming site VG24/7 reports that its sources have also claimed that Microsoft is aiming for a Christmas 2013 release date for the new console.